The Indian Media Business 4nbsped 2013031350 9788132113560 Compress

Praise for earlier editions
‘A well researched guide to the difficult yet dynamic terrain of the Indian
media business.’
–The Financial Express
‘This best-selling book presents a comprehensive analysis of the current state

of the Indian media industry.’
–The Times of India
‘This book presents a comprehensive history and up-to-date analysis of the

Indian media industry.’
–DNA
‘This book provides the business history, technology, valuation norms, and
industry trends in print, television, radio, internet, out-of-home media and
events-not covered by any business books so far.’
–The Pioneer
‘A must read for media professionals and for anyone planning to invest in the
Indian media and entertainment business.’
–Free Press Journal
‘This book combines data with rigorous analysis to offer a complete introduc-
tion to the media scenario in India.’
–The Hindustan Times
‘The result of Vanita Kohli’s diligent labour is evident in the book—it has a
very exhaustive account of the media as they function today.’
–Deccan Herald
The Indian
Media Business
The Indian
Media Business
Fourth Edition
Vanita Kohli-Khandekar
Copyright © Vanita Kohli-Khandekar, 2013
Copyright © Vanita Kohli, 2003
All rights reserved. No part of this book may be reproduced or utilised in any form or
by any means, electronic or mechanical, including photocopying, recording or by any
information storage or retrieval system, without permission in writing from the publisher.
First published in 2003

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
Contents
Illustrations ix
Cases xi
Foreword by Uday Shankar xiii
Preface xv
Acknowledgements xvii
Special Credits xxi
The Future of Indian Media xxiii
1. Print 1
2. Television 67
3. Film 159
4. Music 227
5. Radio 263
6. Digital 299
7. Out-of-home 349
8. Events 387
References and Select Bibliography 415

Index 425
About the Author 443
Illustrations
Figures
Figure 0.1 The time spent on media and the reach
of media xxviii
Figure 0.1a Weekdays xxviii
Figure 0.1b Sundays/Holidays xxix
Figure 0.1c Growth in media xxx
Figure 0.1d Time spent on print versus reach xxx
Figure 0.1e Time spent on TV versus reach xxxi
Tables
Table 0.1 The Indian media and entertainment
landscape xxxi
Table 0.2 Advertising spend on media xxxii
Table 0.3 The investment into the media and
entertainment business xxxiii
Table 0.4 The leading media groups in India xxxiii
Table 0.5 Indian media and entertainment—The
journey so far xxxiv
Table 1.1a The top advertisers in print—Product
categories 49
Table 1.1b The top advertisers in print—The companies 50
Table 1.2 The print industry in India—The big picture 52
Table 2.1 The growth of TV broadcasting in India—
The basic numbers 135
Table 2.2 The television business—India and
the world—A snapshot 137
x THE INDIAN MEDIA BUSINESS
Table 2.3 The growth of Indian TV broadcasting—The

programming genres 139
Table 2.4a The top advertisers on television—Product
categories 141
Table 2.4b The top advertisers on television—Companies 142
Table 3.1 The shape of the Indian film industry 218
Table 3.2 The big guys in film retail 219
Table 3.3 The Indian film industry: Spot the differences 219
Table 4.1 The shape of the Indian music industry 255
Table 5.1a The top advertisers on radio—Product
categories 294
Table 5.1b The top ten advertisers on radio—Companies 295
Table 6.1 The shape of the Indian digital media market 336
Table 6.2 The digital media market—The big picture 337
Table 7.1 The shape of the Indian outdoor market 380
Table 8.1 The shape of the Indian events business 410
Cases
Case study
Cross media or across media—The sad story of regulation
in media xxxv
Caselets
Caselet 1a The Digital Devastation—The American
story 52
Caselet 1b The rising power of Hindi newspapers 56
Caselet 1c The Indian readership survey and why it
is changing 59
Caselet 2a Everything you wanted to know about
digitisation 144
Caselet 2b How to fix the news broadcasting business 149
Caselet 2c Television and the online world—
The American story 151
Caselet 3a The diversifying revenues of Indian films 220
Caselet 3b In film placements—A brief history 221
Caselet 4a The new copyright act and what it means 256
Caselet 6a Social media, defamation and libel—The
legal guide 337
Caselet 6b The rise of social media 341
Caselet 7a Why the world hates outdoor media? 383
Caselet 8a The encompass story 412
Foreword
For most of us in the media and entertainment industry, we

chose this profession because we were excited by the possibility
of telling a great story that has not been told before, of putting the
spotlight on consequential moments, of inspiring the imagina-
tions of millions. We were acutely aware of the important role of
the media in influencing minds and shaping narratives. We knew
too that we could help shape the story of an old civilisation and a
young country engaging with each other to craft an exciting new
India.
The reasons to be a part of this industry continue to stay true
and continue to be compelling. Without question, these are ex-
citing times for us. The audience for our stories is growing. Our
ability to attract exciting talent into the industry continues. Our
interest in the world, and the world’s interest in us, is translating
to compelling new relationships and alliances. And our collective
appetite to experiment and take risks is enormous. All of these
have translated to robust growth in each sector of this industry.
It is, therefore, important to step back and reflect on what is
truly important and consequential. And, in my mind, there are
two important changes that are currently underway in the indus-
try that have an enormous impact on its health and direction.
The industry is in the midst of a massive buildout of a modern
infrastructure that will allow its story tellers to engage new audi-
ences across the country in formats that are old and new. This
buildout is happening across a diverse set of distribution plat-
forms including cable and satellite, fixed and mobile telecom-
munication networks, and digital and analogue theatre systems.
The changes will create new consumption habits and behaviours;
make some devices obsolete even as new ones find their place;
and facilitate the emergence of new winners. Through all this, the
power will continue to lie in the ability to tell a great story.
xiv THE INDIAN MEDIA BUSINESS
But, what is consequential is that these changes also offer all of

us an opportunity to get rid of many old habits that are destruc-
tive. From not being aware of our consumers to not knowing how
much they are charged, from disrespecting intellectual property
rights to undervaluing our content, many unhealthy habits were
also the result of an antiquated distribution system. The dramatic
changes currently underway offer us an opportunity to create
new practices that reward participants in the value chain in a fair
and transparent manner, directly proportional to the value they
bring in shaping consumers’ experiences.
An even more consequential issue is the one on freedom of
speech. This perhaps is the only major democracy in the world
where, after over 60 years of independence, there continues to be
a debate on how much freedom can be given to the media. It is
shocking that there are still groups and interests who continue
to debate on the right amount of freedom that can be granted to
media; as if this is something to be granted and as if this is even
negotiable.
There is a strong relationship between creativity and the space
for free expression. So, what is troubling is that in a very com-
petitive world, we are questioning the scope of free speech—one
of the few real sources of advantage for us. China and Russia are
way ahead of us in most areas of business and industry. But we,
as a democracy, should be unquestioningly leveraging the demo-
cratic advantage that we have over them and many other com-
petitors to become a global media and entertainment giant.
All of us agree that the role of media is to question the status
quo. But with the right to question must come the right to pro-
voke and the right to offend. In the absence of these, there is no
debate and without debate there is no clarity. It is time for us to
recognise that free speech is what is sacrosanct, not the right to
be offended.
Clearly, these are consequential times for the Indian media
and entertainment industry. Through her articles and columns,
Vanita has played an important role in putting the spotlight on
the industry with incisive research and thoughtful analysis. Her
book is a valuable effort to use data and research to explain how
the industry works, and the many changes that are underway.
Uday Shankar
CEO, Star India Limited
Preface
The book you are holding is now in its tenth year. When I started
writing the first edition of The Indian Media Business, the cover-
age of media and entertainment was patchy. Not too many people
saw it as seriously as IT or telecom. By the time the first edition
hit the market, in 2003, we were on the cusp of a boom in news
channels, there was a lot of excitement about the film industry,
and television was a big, fat profitable market. By the time the
third edition came out in 2010, every major foreign investor was
here. The Media and Entertainment (M&E) business brought just
under one per cent of GDP and created millions of jobs. There
was no doubt that this was a serious business, way beyond the
song and dance or tear-jerkers that symbolised it.
The third edition was, arguably, the toughest. It took over 18
months to write. The book was templatised, two new chapters
added on outdoor media and events, and a format was created that
would meet the requirements of a very disparate set of readers—
students, foreign investors and entrants into the industry. By that
time the book had also become part of the curriculum at most
major mass communication schools. So I put in lots of caselets to
illustrate the variety of things happening.
This edition follows the template created in edition three. It
looks at each segment—print, TV, films, and so on—from a va-
riety of perspectives. These are the business dynamics, history,
regulation, the big changes and challenges the business faces,
valuation norms and so on. So the book sticks to its basic prem-
ise, one it began with in 2003—that of being an in-depth, ready
reckoner for anyone looking at the business.
There are however four significant changes. One, I have done
away with the chapters on the internet and telecom. Instead, I
have added a comprehensive one on digital media. Two, I have
tried to standardise the numbers as much as possible. So even
though I don’t agree with the numbers in the FICCI-KPMG 2013
xvi THE INDIAN MEDIA BUSINESS
report completely, for the sake of consistency, I have used those.

Three, as several segments of the industry grow from their en-
trepreneurial phase into a more mature one, regulation will
become more critical to facilitate growth. So, this edition does
a lot more of regulation caselets than the earlier ones. Four, this
edition, more than any of the others, is quite blunt in tackling the
softer, more qualitative issues on ethics, paid news, ratings scandal,
among other things.
As usual, feel free to revert to me with feedback at vanitakoh-

li@hotmail.com.
You can follow my work at https://twitter.com/vanitakohlik.
Vanita Kohli-Khandekar
Acknowledgements
My heartfelt thanks to the following people for sharing their time

and insights with me. Without them this book would not have
been possible:
A.K. Bhattacharya—Editor, Business Standard. Anish Dayal—

Advocate, Supreme Court of India • Ameen Sayani—radio profes-
sional • Ashni Parekh—media lawyer • A.S. Raghunath—media
consultant • Arvind Kalia—Patrika Group. Amit Khanna—Reli-
ance Entertainment • Ajay Sekhri—chartered accountant • Ajay
Shanghavi—Metalight Productions • Ajay Bijli—PVR. Arpita
Menon—Star India • Apurva Purohit—Radiocity • Alok Mittal—
Canaan Partners. Amrit Shah—film industry veteran • Ashok
Mansukhani—Hinduja TMT • Ajit Balakrishnan—Rediff.com
•Amit Chopra, former CEO, Hindustan Media Ventures Ashok
Desai—ABP Private Ltd • Amol Dhariya, director, IDFC Capital.
Ajay Gupta—ABP Private Ltd • Ajay Upadhayay—MediaGuru •
Arvind Kalia, national head of marketing, Patrika Group. Ash-
vini Khandekar—TAM Media Research Basant Rathore—Jag-
ran Prakashan • Bhaskar Ghose—former I&B secretary • Bala
Deshpande—NEA • Bharat Kapadia—Ideas@bharatkapadia.
com • Brian Tellis—Fountainhead Promotions • C.A. Gupta—
Deloitte Haskins & Sells. Cyriac Mathew—Mid-Day • Chandan
Mitra—The Pioneer • Dinyar Contractor—Satellite & Cable TV
Magazine • Deepak Choudhary—EMDI • Deepak Nanda—in-
vestment banker • G.S. Randhawa—Press Information Bureau
• G.K. Krishnan—Ex-Aaj Tak • Gita Ram—Omnicom • G.P.
Sippy—Sippy Films •Girish Agarwal, director, DB Corporation
Hemant Mehta—IMRB • Harish Bhimani—radio professional •
Hormuzd Masani—Audit Bureau of Circulations • Hiren Gada—
Shemroo. Indrajit Sen— OAAI • Ishan Raina—OOH Media •
Jagjit Kohli—Digicable • Jaideep Chakraborty— BCCL • Ka-
pil Ohri—afaqs! Campus. Katy Merchant—ex-IMRB • Kalpesh
xviii THE INDIAN MEDIA BUSINESS
Vora—Creation Publicity • Kanchan Sinha—Amarchand Man-

galdas • L.V. Krishnan—TAM Media Research • N. Murali—The
Hindu • Nitin Gupta—Ernst & Young • Namrata Datt—Ernst &
Young • Maheshwar Peri, the head of Pathfinder Publishing. Mo-
han Nair—Mathrubhumi • Roop Sharma—Cable Operators Fed-
eration of India • Mr Saxena—Press Institute of India • Mammen
Mathew—Malayala Manorama • Mangesh Borse—Symbiosis •
Maneck Davar—Spenta Multimedia • Mohan Mahapatra—ex-
Virgin Music • Meenakshi Madhvani—Spatial Access • Mahen-
dra Swarup—Smile Technologies • Michael Menezes—Showtime
Events • Mohit Hira—JWT • Mohammed Morani—Cineyug •
Mandar Thakur—Times Music • Neeraj Roy—Hungama Digital
Media. Niren Shah—NVP India. Nikhil Pahwa –Medianama.
Pankaj Wadhwa—ex-Kidstuff Promos • Pradeep Guha—Culture
Company • Pratap Pawar—Sakal • Pradeep Chanda—consultant
• Prashant Powar—WPP • Prem Panicker—Independent jour-
nalist• Punitha Armugham—Google India • Prashant Panday—
ENIL • Prakash Chafalkar—Multiplex Association of India • R.S.
Narayan—ex-Star India • Radha Namboodri—AIR Mumbai
• Ramesh Lakshman—RLC • Raj Singh—Ergo • Rajesh Jain—
emergic.org • R.P. Singh—Sirez Group. Rajesh Tahil—Hillroad
Media • (late) Rajesh Kanwal—afaqs! • Ratish Nair—AdMag-
net. Roshan Abbas—Encompass • Sreekant Khandekar—afaqs!
• Sanjay Gupta—Jagran Prakashan • Sankara Pillai—ex-ORG—
MARG • Shyam Malhotra—ex-Cybermedia • Samir Kumar—
Inventus India Advisors. Satish Shenoy—formerly with IL&FS
Bank • Sameer Kale—PR consultant • Sreedhar Pillai—film ex-
pert • Shobha Subramanyan—ex-ABP Private Limited • Sanjay
Chakraverti—WPP Media • Sevanti Ninan—media columnist •
Shravan Shroff—Shringar Cinemas • S. Keerthivasan—ex-Fever
FM • Suresh Thomas—Crescendo Music • Sunil Lulla—Times
TV • Shashi Gopal—ex-Magnasound • Shaju Ignatius—enter-
tainment consultant • Supran Sen—Film Federation of India •
Siddharta Dasgupta—Blackberry India • Siddarth Roy-Kapur—
UTV. Sanjeev Sharma—ex-Nokia • Sachin Kalbag—Mid-Day
• S.C. Khanna—AUSPI • Sunil Rajshekhar—BCCL • Sanjiv
Agrawal—Ernst & Young • Siddhartha Mukherjee—TAM Media
Research • Shabiir Momin—Zenga TV. Sunaman Sood—Acendo
Capital • Siddharth Jain—iRock Media • Sumantra Dutta—Star
Group • Sweta Agnihotri—Big Music and Home Entertainment
ACKNOWLEDGEMENTS xix
• Sajith Pai—BCCL • Sumeet Chatterjee—RPG Group • Tariq

Ansari—Mid-Day Multimedia • Tarun Katial—Big FM • Tushar
Dhingra—DHR International • Uday Singh—MPAA • Viney
Kumar—IDBI • Vinod Mehta—Outlook • V.Sudarshan—Hansa
Research Vivek Couto—Media Partners Asia Vijay Dixit—AIR
Mumbai • Vikas Joshi—Dainik Jagran • Vikash Mantri—ICICI
Securities • Vandana Borse—Symbiosis • Yash Khanna—Inde-
pendent Consultant • Yogesh Radhakrishnan—ex-ETC Net-
works • Yogesh Shah—ex-ETC Networks
My special thanks to the following people for giving me the

professional and logistical support to research and write various
editions of this book:
A.K. Bhattacharya • Samit Sinha, Aveek Sarkar, Niranjan Ra-

jadhyaksha, Prosenjit Datta, Avinash Celestine, Sheril Dias •
Mangesh Borse, Vandana Borse • Yogendra and Namita Arora
• Vijaya Khandekar.
Special Credits
Research assistant—Sinduja Rangarajan—has worked as a quali-

tative researcher with TNS India and with Colors (Viacom18
Media). She is currently studying journalism at University of
Southern California. She tweets at @cynduja and blogs at mus-
ingmistletoes.wordpress.com.
Regulation section updated by Abhinav Shrivastava, an asso-

ciate with the Law Offices of Nandan Kamath in Bangalore. He
can be reached at abhinav@lawnk.com. He specialises in media,
broadcasting and technology regulation.
A huge debt of gratitude to A.K. Bhattacharya, editor, Business

Standard for the permission to excerpt and quote from my work
for the paper over the last five years. Thank you, AKB.
The Future of Indian Media
It is the hundredth year of Indian cinema.1 Private television

broadcasting has just completed 20 years. The internet turned 18
this year. And private radio broadcasting is more than a decade
old. The book you are holding is in its tenth year. This then is a
good time to ask the question, where are we headed?
All the research that went into this edition and the previous
ones, points to three trends:
One, there will be more media and more mass media in

the coming decade.
Two, the battle for scale and margins will continue.
Three, we will become a nation of local media ghettoes.2
There are other broad trends—digitisation, the spread of de-

vices, the rise of digital media, the rising political ownership of
news media, among others—which this book covers in great de-
tail. But most of these are subsumed by the broader trends that
these pages talk about. For instance, digital media too faces the
same issues of scale and profitability that other media does.
On then to what the future holds for the Indian media and
entertainment (M&E) business.
More Media, More Mass Media and More Fun

India is a hugely under-penetrated media market (see Table 0.1).
Except perhaps in mobile phones and TV screens, we haven’t
reached large parts of the potential market. For example, at over
60 per cent literacy levels, the headroom for growth in print is
another 300 million people. So, one part of the growth will come
xxiv THE INDIAN MEDIA BUSINESS
from the sheer numbers that haven’t even been exposed to or

reached by various media (see tables 0.1 a, b, c, d and e and Table
0.2 for growth over the years).
Now, look at where the money is going. While the figures in
Table 0.3 don’t give a break-up, it is evident from the deals that
make up these totals. The major private equity deals in the last
three years have been in digitising cable, in DTH, in digital cin-
ema, or in smaller companies which provide services to India’s
fledgling digital media industry. Ad networks, payment gateways
and so on are very popular with investors. The major M&A deals
were Disney–UTV and PVR–Cinemax among others. They are
driven by strategic reasons or a desire to scale up. Then there is
the money that companies raise through debt, internal accrual
and private investors. None of these get tabulated or added to the
total. For instance, hardly a fraction of the $4 billion sunk into
DTH shows up in the public numbers.
A bulk of the investment in M&E is going into increasing the
reach of print, TV, mobile and cinema. It is also going into pro-
duction studios, outsourcing services, more offices, news bureaus
or expansion into the Indian and overseas market. All of it has
the effect of creating better media infrastructure. That is the thing
most needed if we are to monetise the whole promise of being the
world’s second largest TV, newspaper and mobile market, largest
producer of films or one of the fastest growing internet markets.
All those volumes mean nothing if we cannot monetise them.
And we cannot monetise them unless we reach all the consumers
who can pay for or be advertised to, at level one.
Historically, there is a strong correlation between invest-
ment in media infrastructure and the growth of audience
and revenues. Take a look at Table 0.5. I have used the decade
between 2002, when the first edition of this book was being
written, and 2012, to do a simple analysis of what happened in
each media segment. Each of them has grown as money was
pumped into DTH, broadband networks, multiplexes, digital
theatres and so on. This growth is heartening to say the least.
But, to repeat myself for the umpteenth time, I wish it had been
more profitable. The US, for instance, did over $10.8 billion
from the sale of 1.36 billion tickets. We did $1.7 billion from 3
billion tickets. And, mind you, Hollywood makes less than half
the films we make.
THE FUTURE OF INDIAN MEDIA xxv
Even if you choose to ignore the US, since it is a more mature

and richer market, look at Brazil or Indonesia. Their TV markets
are nowhere close to ours in size, but twice as profitable. You
could sneer at profit, but without profit there is no ploughing
back money into the business. Television is a classic example of
an industry which had size but was headed nowhere till both
consolidation and digitisation began a couple of years ago. (See
Chapter 2—TV)
The Battle for Scale

And that brings me to the second prediction—that for the com-
ing five, maybe 10 years, scale and profitability will continue to be
issues. Look at Table 0.4. After almost two decades of growth of
private media, we finally have two media groups with a top line
of over a billion dollars. The country’s largest telecom provider
Bharti Airtel’s revenues in 2012 were 86 per cent of the size of the
entire M&E industry. To repeat, the US film industry makes al-
most 10 times as much money for half the films made and tickets
sold in India. Every investor you speak to will say that scale is the
biggest issue, be it at a firm level or the industry level.
Why is scale an issue? Because the industry doesn’t have pric-
ing power. Extreme fragmentation and ad hoc regulation limit
pricing power with consumers and with advertisers. The frag-
mentation in some parts of the media business is now legendary.
There is always a cable operator in your neighbourhood willing
to offer you a better deal. Ditto for DTH. Within broadcasters,
hyper-competition and a heavy dependence on advertising reve-
nues has meant that inventory of ad seconds has kept rising even
as the rate per ten seconds kept falling. In 2002, we had 408 mil-
lion TV viewers, about 80 channels and `96 billion in revenues
from advertising and pay. At that time, operating margins were
at 30 per cent or more. In 2012, we have over 800 channels, 740
million viewers and `400 billion in total revenues. But margins
average between 13–15 per cent for many broadcasters.
Much of this is now changing. In television, for instance, the
forces of consolidation and digitisation will help improve mar-
gins as discussed in detail in the relevant chapter. More than 65 per
cent of all TV viewership is now shared by five television networks.
xxvi THE INDIAN MEDIA BUSINESS
This is bringing pricing power back to the industry. For the first
time in perhaps a decade, some networks increased ad rates in
2012. On the other hand, digitisation will bring in transparency
and more pay revenues. This in turn means a better handle on
what consumers like and more variety in programming.
In the film industry, while the production end remains largely
fragmented, the retail end is reasonably consolidated, thanks to
the mergers that happened last year. In the newspaper market,
things are becoming clearer. In Hindi, the top five brands—
Dainik Jagran,3 Dainik Bhaskar, Hindustan, Amar Ujala and
Rajasthan Patrika—control roughly 60 per cent of the audience
and total revenues. In English the top three groups—The Times,
HT Media and The Hindu—control a chunk of the readership
and revenues. More consolidation continues to happen as brands
either die or are snapped up.4
You could argue that at 85 per cent, TV and print form the big-
gest chunk of the M&E business. If they are finally consolidating,
it means that scale and profitability will start coming in.
The reason for pessimism: Indian M&E companies have done
well in a growth market. But their ability to build organisations,
processes and systems that could handle growth is suspect. With
hyper-competition and growth come ethical, business and peo-
ple dilemmas that require strong, mature organisations. But time
and again, Indian media companies crumble at the first sign of
crisis. Some happily give up on ethics, price points or run to reg-
ulators to queer the pitch in their favour. And the large chunk
of companies which do not do this, maintain a stony silence, in-
stead of working together to fix things.
So, it will be a long, painful haul before we see the emergence of
multibillion dollar media companies that are truly representative
of the power of 1.2 billion consumers. These will raise tricky regu-
latory questions, such as those on cross media regulation, tackled
in the case study that accompanies this section (Case Study: Cross
media or across media—The sad story of regulation in media).
Little Islands of Media

The last, albeit more textural, comment is about what the growth of
media is doing to us as consumers and Indians. It will make India
an agglomeration of media ghettoes that may or may not talk to or
THE FUTURE OF INDIAN MEDIA xxvii
even be aware of one another. Why is that so? All media growth
is coming from going deeper into India, into more languages, re-
gions, towns, villages and cities. Add the fact that thanks to digital
technology, in TV or radio, in print or on the internet or telephone,
slicing and dicing consumers has become easier. So multiplexes
can time, price and schedule different kinds of films for different
sets of audiences—Peepli Live for urban audiences and Dabangg for
smaller towns. In the online world, I can create a news list on Twit-
ter that feeds me news only about the business of media and enter-
tainment. You can subscribe to an online service that offers only
Carnatic music or jazz. You can buy an app that allows you to read
only golf magazines. You could, post TV digitisation, be watching
only sports channels and choose not to take anything else.
This segmenting of the market, combined with the custom-
isability of digital means we isolate ourselves in our languages,
regions, tastes, beliefs and values. By choosing to block out other
media, we block out other points of view or things that would
have interested us earlier. We choose to stay with a set of people
or subjects or languages that matter to us. For instance, there may
be things happening in the pharma or IT businesses that I should
theoretically know if I am to connect the dots. However, since
I like reading only about the media business, I limit my world.
Similarly, millions of us are limiting our worlds.
There is no right or wrong about it. This is inexorably where
the market, technology and our own proclivities as consumers
are pushing us. It will turn us into insular groups of consumers
who will probably not be tuned into the larger picture on any-
thing. It is worth noting that the journey has begun.
Figure 0.1 The Time Spent on Media and the Reach of Media
Figure 0.1a
Weekdays
2000 2001 2002 2003–04 2005 2006 2007 2008 2012
Press No of readers (in millions) 232 233 231 252 360 300 302 320 351
Time spent in minutes. All India 12+ 32 31 30 29 35 30 27 26 28
TV No of viewers (in millions) 333 343 350 370 386 423 437 460 569
Radio No of listeners ( in millions 122 105 101 138 153 162 173 178 158
Internet No of users ( in millions) 3 5 8 12 12 14 11 14 42
Source: Hansa Research & IRS.

Note: 12+ refers to age group.
Figure 0.1b
Sundays/Holidays
2000 2001 2002 2003–04 2005 2006 2007 2008 2012
Press No of readers (in millions) 223 225 222 261 370 291 298 317 348
TV No of viewers (in millions) 334 349 357 376 390 418 431 462 564
Radio No of listeners ( in millions 120 104 103 131 149 156 166 175 152
Internet No of users ( in millions) 2 4 6 10 11 11 10 11 39
Source: Hansa Research and IRS.

xxx THE INDIAN MEDIA BUSINESS
Figure 0.1c Growth in Media
All India Reach (Urban + Rural) [million]

2008 2012 % change
12+ India 842.9 909.3 7.9
Literacy 572.3 656.3 14.7
Any Publication 323.4 353.3 9.2
Any Daily 313.4 345.5 10.2
Any Magazine 90.7 83.0 –8.5
TV 467.4 571.4 22.3
Radio 180.4 159.8 –11.4
Cinema 83.3 81.4 –2.3
Internet 17.3 42.3 144.5

Note: 1) AIR is average issue readership. 2) 12+ refers to age group.
Figure 0.1d Time Spent on Print Versus Reach
400 360 36
351
350 320 34
32 300 302
31 35 32
300
30 29
30
250 30
252 28
200 232 233 231 28
26
27
150 26
24
100 Press No of redaders (in millions) 22
Press Time Spent in minutes. All india 12+
50 20
2000 2001 2002 2003–04 2005 2006 2007 2008 2012

THE FUTURE OF INDIAN MEDIA xxxi
Figure 0.1e Time Spent on TV Versus Reach
650 120
114 110 112
108 106 569
550 98 100
95 100
423 437 92 460
450 80
350 423 60
350 370
333 343
250 40
150 TV No of viewer (in millions) 20

TV Tims spent in minutes. All India 12+
50 0
2000 2001 2002 2003-04 2005 2006 2007 2008 2012
Table 0.1 The Indian Media and Entertainment Landscape
Media Reach Media Revenues (2012, ` billion)

Segment (million people) Advertising Pay Total
TV 765 125 245 400
Print 351 150 74 224
Film 81.5 3 112.4 115.4
Events na na na 28
Digital 900 21.7 na 21.7
Outdoor na 18.2 none 18.2
Radio 158 12.7 none 12.7
Music na none 10.6 10.6
Total 830.6
Sources: FICCI-KPMG 2013, EY’s The Business of Experiences Report 2012,

author estimates.
Notes: 1) All figures are for 2012. 2) For print reach refers to readership. For TV
it refers to viewership, for radio to listenership. For digital (internet & telecom),
I have used the reach of mobile phones instead of just the internet which
reached 120 million people in 2012. Pay revenues in digital will be the ones
from VAS ones such as caller tunes etc. However since they are already added
to the revenues of the respective industries such as radio or music, have left
that cell blank. 3) The TV and film revenues are different from FICCI’s because
of the addition of cable advertising and in cinema advertising respectively.
na: not available.
Data compiled and analysed by Vanita Kohli-Khandekar. This data may be
reproduced only with due credit either to The Indian Media Business or Vanita
Kohli-Khandekar.
xxxii THE INDIAN MEDIA BUSINESS
Table 0.2 Advertising Spend on Media (` Mn)
Internet/ Total
Year Print TV Radio Cinema Outdoor Digital (` million)
1991 10690 3900 680 70 1584 na 16924
1992 13250 3950 590 80 1080 na 18950
1993 15550 4960 680 90 1632 na 22912
1994 22390 8480 1020 100 2152 na 34142
1995 27350 13450 1340 90 4064 na 46294
1996 30470 19750 1130 110 7072 na 58532
1997 31280 25840 1360 410 8800 na 67690
1998 35030 33670 1400 500 10512 na 81112
1999 39240 39410 1450 620 11200 na 91920
2000 43160 44390 1460 700 6400 na 96110
2001 43250 45640 1760 790 6400 300 98140
2002 44240 47170 2110 790 4392 500 99202
2003 46890 50940 2270 820 5488 540 106948
2004 60348 58020 2769 984 6860 702 129683
2005 79290 67460 3600 1160 9940 1229 162678
2006 84900 60500 6000 na 11700 2000 165100
2007 100200 71100 7400 na 14000 3900 196600
2008 108000 82000 8400 na 16100 6000 220500
2009 110400 88000 8300 na 13700 8000 228400
2010 126000 103000 10000 na 16500 10000 265500
2011 139400 116000 11500 na 17800 15400 300100
2012 150000 124800 12700 3000 18200 21700 330400
Source: Lodestar Universal, FICCI-KPMG 2013 and author estimates.

Notes: 1) The data till 2005 is sourced from Lodestar Media (now Lodestar
Universal). From thereon the source is KPMG’s reports for FICCI Frames. 2)
For cinema advertising I have used my own estimates. 3) Since the sources
are varied there are several discrepancies in the numbers that I am unable to
reconcile.
reproduced only with due credit to either The Indian Media Business or Vanita
Kohli-Khandekar.
THE FUTURE OF INDIAN MEDIA xxxiii
Table 0.3 The Investment into the Media and Entertainment

Business
Year PE Deals (` billion) M&A Deals (` billion)

2010 165.42 263.96
2011 300.33 774.3
2012 417.55 988.32
Source: VCCedge, a data service from VCCircle.

This data may be reproduced only with due credit either to The Indian Media
Business or Vanita Kohli-Khandekar.
Table 0.4 The Leading Media Groups in India
Revenues (` billion)
Company/Group FY 2011 FY 2012 FY 2013
The Times Group (BCCL, TV, internet na 55 67
and ENIL)
Zee Group (broadcasting, DTH, cable 50.27 56.48 63.5
and news)
Star India 29.52 42 61
Bharti Airtel (VAS & DTH only) 29.56 37.14 42.7
Sony (broadcasting only) na 30 31.2
HT Media (Group) 18.1 20.78 20.48
Network 18 (Group) 16.93 20.77 24
Sun Network 20.13 18.48 19.23
Tata-Sky 13.54 15.9 na
Hathway Group (publishing and cable) 13.78 14.98 15
DB Corporation 12.79 14.75 15.92
Prasar Bharati Corporation 10.5 11.83 15.53
Jagran Prakashan 12.47 14.02 15.25
Reliance (ADAG-media) 9.76 11.29 14.9
Malayala Manorama 7.27 9 11
Kasturi & Sons (The Hindu) 9.45 na 11
(Table 0.4 Contd.)

xxxiv THE INDIAN MEDIA BUSINESS
(Table 0.4 Contd.)

Company/Group FY 2011 FY 2012 FY 2013
Disney-UTV na 12.75 na
ABP Limited na 10 na
Sources: Annual reports, company websites and officials, Business Standard

Research Bureau, Capitaline, Media Partners Asia, Crisil and Indiantelevision.com.
Notes: 1) The Times Group’s numbers are estimates of the total of its listed and
unlisted businesses. 2) Star India includes ESPN-Star Sports which it bought out last
year. 3) Bharti Airtel’ s VAS revenues are assumed at an India average of 10 per cent
of the revenues from mobile services. From this figure 40 per cent, the industry
average for peer-to-peer SMSes is eliminated. The remaining has been added to
the DTH figure to arrive at an estimate of total media revenues. 4) The Hathway
figures include the revenues for their listed cable company and estimates for the
unlisted Asianet Cable and the publishing one (Outlook et al.). 5) The Reliance
numbers do not account for its unlisted media businesses such as film production
and gaming. They are a total of two firms—Reliance Broadcast Network and
Reliance Mediaworks. The Reliance Mediaworks topline number is for 18 months.
Data compiled and analysed by Vanita Kohli-Khandekar. This data may be reproduced
only with due credit to either The Indian Media Business or Vanita Kohli-Khandekar.
Table 0.5 Indian Media and Entertainment—The Journey So Far
Media 2002 2012

TV
Audience size (mn viewers) 408 740
Industry size (` billion) 96 400
Print
Audience size (mn readers) 252 351
Industry Size (` billion) 63 224
Films
Audience size (mn tickets sold) 2800 3000
Industry size (` billion) 39 113
Radio
Audience size (mn listeners) 101 158
Industry (` billion) 2.1 13
(Table 0.5 Contd.)

THE FUTURE OF INDIAN MEDIA xxxv
(Table 0.5 Contd.)

Media 2002 2012
Digital
Audience size (mn users) 21 227
Industry size (` billion) 0.5 22
Source: Hansa Research and IRS, TRAI, TAM Media Research, The Indian Media
Business (editon three), FICCI-KPMG 2013.
Note: 1) Audience size data on print and radio is sourced from Hansa Research
and refers to audience on weekdays. For TV it is calculated on the basis on
TAM numbers for 2012. 2) The industry size for all these businesses includes
pay revenues across distribution platforms. 3) Internet user data has been
derived from TRAI numbers. The 2002 internet user data actually refers to
users in 2003, since data for 2002 was not available. 4) the Internet revenue
data is the figure for digital advertising from the FICCI-KPMG 2013 report. This
would include mobile advertising also.
Kohli-Khandekar.
Case Cross Media or Across Media—The Sad Story of

Regulation in Media5
In 1998 the government granted industry status to the film

industry. Within ten years the business grew by almost eight
times in revenue, became more profitable and cleaner. This
was the result of just one piece of positive regulation. Look
at TV. The digitisation mandate, passed in 2011, will over
the next five years clean up the whole business. More than
US$2 billion will get released into the ecosystem as revenue
leakages are plugged and transparency comes in. More im-
portantly digitisation will bring choice and programming
variety to TV audiences.
These examples prove that the power of regulation to be a
force for good is phenomenal.
Therefore there is immense frustration with how few
and far in between good pieces of media regulation are in
India. Largely it has been ad-hoc and dictated by political
(Case Contd.)
xxxvi THE INDIAN MEDIA BUSINESS
(Case Contd.)
compulsions or fear. The industry’s need for growth, the au-

dience’s need for better prices and variety and the economy’s
need for the taxes and employment this industry generates
have largely been ignored.
Take cross-media norms for instance. The Telecom Reg-
ulatory Authority of India (TRAI), which functions as the
broadcast regulator, had done a paper on this in 2008. At
the request of the ministry of Information and Broadcasting
(MIB) it did another one in in 2013. Sure cross-media mo-
nopolies are worrying and several have already emerged in
Tamil Nadu, Andhra Pradesh or Punjab among many other
states. They could be fixed by having ownership and share of
voice caps. The norms are set in dozens of countries. All we
need to do is apply them to India. And in places with exist-
ing cross-media monopolies, the concerned companies have
to be given enough time to reduce their holding or market
share.
The building of cross-media monopolies, however, is not
as worrying as the ownership of media. More than a third
of news channels are owned by politicians or builders affili-
ated to them. Many are just political vehicles, others peddle
influence for builders. As a result the companies that want to
make money by running a good old-fashioned news outfit
end up competing with ones that have no shareholders or
investors to answer to. An estimated 60 per cent of cable dis-
tribution systems are owned by local politicians. There are
dozens of small and big newspapers that are owned by poli-
ticians or their family members which influence the course
of several local elections. Many newspaper chains with po-
litical affiliations also own broadcast networks. Most now
have internet portals.
It is imperative that we discuss the political ownership of
media and its impact on the nature, quality and course of
debate in the country. What harm is it doing to the long term
fabric of this business? Will it make it unviable in the long
run, will it put off legitimate Indian and foreign investors
(Case Contd.)
THE FUTURE OF INDIAN MEDIA xxxvii
(Case Contd.)
because policy could be changed to accommodate this class

of owners.
In 2013, the TRAI recommended, for the second time in
four years, that state or central governments should not be
allowed into the business of broadcasting or distribution of
television channels. There has been no reaction to this.
While the MIB should be looking at political ownership
of media and how it violates the basic tenets of democracy it
is busy trying to muscle its way into television ratings. In the
last five years there have been three reports and several ref-
erences to the television rating system. Sure there are issues
with it. These are discussed in detail in the chapter on televi-
sion. But it is an industry matter. If the government is not
needed to check the box-office gross of a film or the reader-
ship numbers of a newspaper why is it needed to check the
ratings of a TV channels. Let the industry fix the system. Put
some pressure on it to do so, but keep away from it.
Then there is content regulation. The MIB keeps making
references to it though it hasn’t done anything. The self-
censorship norms in TV and print exist and are working,
albeit, imperfectly. The last thing we need is the govern-
ment telling us what show to watch or not.
Here are some things the government could look at but
is ignoring completely—rationalising entertainment tax in
films, doing away with double taxation on DTH, making it
easier to hire space on a private satellite since ISRO is woe-
fully behind on meeting demand. These however are not
anyone’s priority. And that brings one back to the point that
media regulation in India is warped in its priorities and fo-
cus and is too ad-hoc. This is because no one body has the
big picture in their head.
That is why, even before we start debating cross-media
norms, we need an independent-of-the-government media
regulator a la Ofcom or Federal Communications Commis-
sion (FCC). There is no way a coalition government will ever
be able to arrive at a consensus on cross-media or any other
(Case Contd.)
xxxviii THE INDIAN MEDIA BUSINESS
(Case Contd.)
media rules that involve any control. Largely governments

are either too afraid to touch media (the paid news scandal
in newspapers) or love to meddle with it (content). Either
way its intervention does not come from a neutral, big pic-
ture perspective.
If the media a regulator is truly independent—like SEBI
(Securities and Exchange Board of India) or IRDA (Insur-
ance Regulatory and Development Authority)—it is stronger.
It is backed by an act of parliament and its decisions are usu-
ally harder to challenge creating more stability.For instance
the TRAI’s (Telecom Regulatory Authority of India) coming
as broadcast (carriage) regulator actually helped clean up a
lot of the on-ground mess in cable.
This media regulator could then decide on a policy vis-a-
vis ownership and the dozens of other issues that the indus-
try faces. The question is which government will show the
‘political’ will give up media regulation.
Notes
1. All of these are the timelines for these media in India. Unless specified me-
dia industry, media and entertainment (M&E) industry refers to the Indian
M&E business.
2. For many of you who have been reading my columns, or have been students
or heard me speak at public forums, this will sound familiar, since I have
been saying this for some time now.
3. Disclosure: I write a fortnightly column for Mid-Day, a paper owned by
Jagran.
4. The print part is excerpted from my column Coping with Consolidation,
Business Standard. December 18, 2012.
5. Excerpted in large parts from my writings on regulation in Business Standard.
Chapter 1
Print
The Indian print industry’s death-defying growth will continue for

a long time.
I t is quite tiring to attend any forum to do with the print media

these days.1 The talk always turns to the ‘death of print, growth
of online,’ ‘the rise of social media,’ ‘smartphone and tablet pen-
etration,’ and so on and so forth. None of these are wrong. But
there are other facts that are more important.
Fact one, the growth trajectory for print and online in the
emerging world is completely different from that in the declin-
ing markets of the US and parts of Europe. Print in India, China
and Brazil, among dozens of other countries, is growing and will
continue to grow along with online and other media. At over 110
million copies sold every day, India is the second largest news-
paper market in the world. It is also one of a handful of markets
that is growing in double digits. Of the top 100 paid-for dailies
in the world, 19 are from India, second only to China which has
25.2 Newspapers reach just over 38 per cent of Indians according
to Hansa Research and the Indian Readership Survey (IRS) that it
does. On the back of growth and rising revenues, some of the top
newspaper groups in India have operating margins upwards of
25 per cent—a figure that American newspapers achieved at their
peak (down now to 10 odd per cent). Aided by rising literacy in
India, total revenue in print is slated to grow at a CAGR3 of 8.7
per cent between 2012 and 2017. It stood at over `224 billion in
2012 (see Table 0.1). Even as new advertisers come into the fray,
older ones have been increasing the money they spend plus the
volumes of space they buy in print (see Table 1.1a and 1.1b).
Fact two, the newspaper industry is one of the most profitable
and stable parts of the media business in India. Ever since India
2 The Indian Media Business
opened up foreign direct investment (FDI) in print media—and

particularly in the last five years—scores of print publications,
largely magazines, have been launched in the country.4 From
2010 to 2012, the Indian media business has attracted private
equity and mergers and acquisitions (M&A) investment of over
a billion dollars. Large bits of this have come to print.5 (See Table
0.4) This has resulted in a lot of action. The last few years have
seen dozens of new editions and brands being launched. There is
Ei Samay, a Bengali tabloid from the Times Group, and Ebela
from ABP Limited, the incumbent in West Bengal. Fortune India
and Forbes India launched their India editions; many of the Hindi
papers went to Jharkhand and expanded into other languages.
Jagran for instance, bought the Mumbai tabloid Mid-Day in
2010.6 The Hindi newspaper market is, in fact, going through its
most competitive and exciting phase (See caselet 1b).
Are we getting unduly influenced by the despair hitting the
newspaper business across the developed world? Possibly. Al-
most every week, there are reports of dropping circulation and
revenues as well as staff cuts at some newspaper or the other in
the UK, Europe or the US. For example, the total revenues for
newspapers in the US shrank from US$ 60 billion in 2005 to US$
33.8 billion in 2011 on the back of falling circulation (see Caselet
1a for more details).7 The thought in everybody’s mind, therefore,
is: Is this a foretaste of the future in India?
Not yet, says almost every analyst and report. ‘While publica-
tions in economies like Brazil and Chile are not suffering from
the immediate loss of advertising and readership experienced by
many Western newspapers, and hold a generally optimistic view
for the future of print, they can see their audiences moving online.
News markets in Asia, Africa and South America may not have
matured fully yet, but they should expect to be faced with similar
challenges in the next 10 to 20 years’, says one global report.8
There are two reasons for this. One is the sheer headroom for
growth given that penetration is so low. The other is that news-
papers in India are delivered at home. In the US or UK, a bulk
of newspaper sales come from newsstands. So there is volition
involved. Till the home-delivery model works economically, it
will be difficult to dislodge dailies from the family’s media basket.
Print 3
There are, however, several signs that online could hit the
English paper market soon. Going by IRS data, in the six years
ending 2011, while the circulation of English newspapers has
gone up by over 70 per cent, readership has crawled by just 2 per
cent. In the same period, the time spent on English newspaper
has dropped by 6.5 per cent. The English papers then should have
been the biggest investors online.
Yet, for an industry that is frothing at the mouth about digital,
the Indian print business has done little to deal with it. Because
the core business is so profitable and large, the enormity of
what the net could do has not hit them. Most pay lip service to
building the digital side of their businesses but very little serious
investing has happened. This is dangerous. Indian publishers
can see what is happening in, say, the US or Europe. They have
the luxury of time. So they could be doing much more than
just putting up their newspaper or magazine online. Much of this
ineptness online has to do with the mindset more than anything else.
Newer publishers such as Forbes India are better at leveraging online
simply because they have no legacy and no baggage.
The other key challenges are those of a growing business. For
instance, there is the issue of building scale. In spite of the huge
amounts of cash they generate, newspaper companies have not
been able to meet investor expectations on returns because scale
has remained elusive. India is a hugely fragmented print mar-
ket as you will read later. The best way of becoming a large-sized
company is to buy out smaller rivals in cities or languages where
you do not have a presence. However, Indian newspaper pub-
lishers have had very little luck with that. This is because small
papers with monopolies in a few cities or a district hate the idea
of giving up control over their fiefdoms.
Besides the trouble with a maturing English paper market or the
challenges of scale, there is a more important issue that publishers
face: the corruption of content and the erosion of the currencies
in the business as you will read in the following section. The paid
news scandal and the print industry’s abysmally sanguine reaction
to it are not good portents for both the business and the ethical
health of the industry. It is also the sort of thing that gives govern-
ment a convenient stick to beat print companies with.
The Shape of the Business, Now

Over the years, the print industry in India has morphed into
something that is quite different from most markets in the world.
There are several factors that set us apart.
The first factor is literacy. For all our pretensions of having
English as a link language, the fact is that just over sixty per cent
of all Indians can read or write. An even smaller percentage is
capable of reading the issues that a newspaper writes about since
literacy is defined as the ability to sign one’s name. Unlike TV or
radio, this factor automatically limits the growth of print. The
flipside is that the English language press commands a premium
because of this reason since advertisers automatically value any-
one who can read an English newspaper. Of course the gap in
ad rates between English and non-English publications has been
narrowing. (see ‘The Way the Business Works’). This is because
the evidence of the rise in purchasing power, across the country,
is so solid and in-your-face that media buyers can no longer hide
behind their English/Metro bias.
Pradeep Guha, former President, BCCL,9 points to the second
factor that sets the print market apart from elsewhere in the
world: ‘In India the sense of nation is very strong. All newspa-
per groups have a strong national presence.’ The Times Group,
The Hindu, Hindustan Times, all strive to be national papers in
English. The growth for even large Indian language groups, such
as DB Corporation or Jagran, hinges on their ability to offer a
national or pan-regional footprint. That is not how the market
developed elsewhere in the world. The US has just one national
newspaper, USA Today, which is weak competition for the thou-
sands of local papers that take away more than 80 per cent of
print ad revenues. Indian advertisers, therefore, have had very
few options that were local or community specific. Radio was
limited to All India Radio (AIR) and TV had not yet developed.
This has changed in the last few years. A whole lot of print op-
tions began developing the moment TV—and especially local ca-
ble channels—started taking off. By 1997, city- or locality-based
newspapers started appearing.
Third, as N. Murali, the former Joint Managing Director,
Kasturi & Sons (publisher of The Hindu) says is, ‘over-dependence
on advertising. It distorts the market and makes the industry
Print 5
more vulnerable to a slowdown.’ That is because there is a strong

positive correlation between the growth of GDP (gross domestic
product) and advertising. It is debilitating for publishers to
sell for between `1–4, newspapers that cost anywhere between
`15–20 a copy just to produce (this does not include fixed costs).
That means that circulation brings in just about 5–15 per cent of
the revenues for English language newspapers and about 30–45
per cent for language ones.10 This puts most newspapers in India
at the mercy of advertisers (see the next section). While cover
price cuts are common in the UK or the US (where circulation
forms 40–60 per cent of revenues), these are usually short term.
In India, cover price cuts have been used year after year by, say,
TOI in Delhi. You could of course argue that price cuts have also
expanded the print market leading to a rise in local advertising.
The Issues
There are two main issues the business faces. These are structural
and, therefore, difficult to tackle, but if the industry gets around
to doing that, it could help increase both revenues and credibility
for the medium.
Lack of Unity
To understand the problems of the Indian print industry just try
reading up on the American or European publishing businesses.
The amount of research put out by the Newspaper Association of
America (NAA), the Newspaper Advertising Bureau, the Maga-
zine Advertising Bureau, among others, in the US is amazing.
Remember that these are markets in decline. But they clearly
spend large amounts of money and time in trying to convince
advertisers that the medium works. Most of the research, done
by professional research agencies, seeks to compare newspapers
or magazines with other media on every parameter possible—
reach, audience composition, efficacy, time spent and so on.
In the last few years, the NAA has launched aggressive initia-
tives to help newspaper owners, especially small local brands, with
the Internet. Some of these initiatives include appointing consult-
ants, essentially newspaper managers, on projects in other papers,
to help them figure out the net. Then there are reports, such as the
Digital Edge Report, that provide a sensible step-by-step guide to
building and sustaining readership. These reports, available online
for free, are wonderful sources of information on the texture of the
market and its extreme competitiveness.
When you read them, you realise how little the Indian news-
paper, magazine or even the TV business does as an industry, to
either protect its interests with advertisers or lobby with the gen-
eral public or government. In fact, a bulk of the research that my
assistant did only came up with examples from how print could,
should or is dealing with online.11
That is the first big issue that the Indian print industry needs
to deal with—its ability to act as one on a variety of issues: robust
metrics, standardised tools for buying and selling, lobbying for
regulatory changes and a gentleman’s agreement on content.
Take metrics, for instance. The two currencies of readership
and circulation have been increasingly under fire from the very
people who should be ensuring their good health. It is normal
for publishers to jump in and out of circulation audits depend-
ing on whether it suits them to show their numbers.12 In other
years, they sue, question or generally harangue both the bod-
ies that monitor circulation and readership even as they twist
the rules themselves. It is routine for newspaper publishers
to despatch suburban editions from a metro if they want to
show increased circulation for a metro edition. (For example, a
publisher could send the Gurgaon edition from New Delhi.17)
Some have even been known to try bribing surveyors of read-
ership data. This even as the bodies that monitor the metrics
are run by publishers in association with advertisers and media
buyers.13
There are, to be fair, issues at the research end too. ‘Since most
research agencies come from markets where newspaper circulation
is declining, they have very little incentive to invest in newspaper
research and measurement and make it more real-time,’ says Guha.
That may be true, but the onus of demanding more intensive and
authentic research rests with publishers, because they stand to gain
the most from it. As the Media Research Users Council (MRUC)
along with the Audit Bureau of Circulations (ABC) rethinks the
way readership is measured and analysed this is changing (see
section on metrics).
Print 7
Compromising Content
The second is its ability—or not—to keep the forces of corrup-
tion of content at bay. This sensitive issue essentially stems from
its extreme dependence on advertising revenues as mentioned
earlier. Compromise could take one of several forms.
The standard form This is usually advertising intrusions into
editorial space or the pure selling out of editorial for ads. Many
advertisers talk openly about what they pay to get their company
featured in a newspaper or magazine. Most usually expect ‘edito-
rial support’ from the media they advertise in. It is routine for
large, profitable media companies to offer such support, so smaller
ones get pressured too.14
None of this was institutionalised or widespread till the paid
news scandal. It was discovered that editorial pieces were paid for
by politicians—who either wanted positive coverage on them-
selves or negative coverage on their rivals during the Lok Sabha
elections from April to May 2009. In July 2009, the Press Council
of India (PCI) put together a two-member subcommittee com-
prising of independent journalist and educator Paranjoy Guha
Thakurta and K. Sreenivas Reddy of the Arunachal Pradesh Union
of Working Journalists (APUWJ). It has anecdotal evidence from
dozens of politicians including MPs, independents and former
ministers cutting across party lines on their experiences with
media organisations during the elections. Many are on record
on rates, dates and publications that asked for money to cover a
candidate or a party. There are politicians from Punjab, Haryana,
UP, Andhra Pradesh, Maharashtra among other states. It also has
depositions or representations from media firms such as Dainik
Jagran, Punjab Kesari, Hindustan, Eenadu and Sakshi among
others. All of them deny any wrongdoing. 15
The report had no clinching evidence against any publication.
A bulk of the transactions was in cash and there were no officially
printed rate cards for the packages allegedly sold by most publi-
cations. Most potential buyers were approached with a sheet of
paper that had some options with the rate on it. Almost all the
evidence came from the complainants and the pieces published
for or against a candidate.
The most significant among the draft report’s recommenda-
tions is an amendment to Section 123 of the Representation of
People Act 1951. The section lists bribery, undue influence, and
appeal on the ground of religion and caste, among other things
as corrupt practices. The report suggests making the practice of
paying for news coverage in newspapers and television channels
an ‘electoral malpractice’ or an act of corruption and a punish-
able offence. The only reaction to this report has come from the
Election Commission of India. It has sought to crack down on
the ‘paid news market’. It reckons that paid news is means for
candidates to overshoot on the ceiling for campaign expenses.
The implications are obvious. As readers or viewers, the way
we think, live, work and the choices we make are influenced
greatly by our media consumption. If readers stop trusting
a brand, they will stop using it, advertisers would leave, rates
would fall and, eventually, so would valuation. That is the theory.
In practice, it would seem that selling editorial is based on the
fact that readers do not know and even if they did, they do not
seem to adequately care.
Media managers argue that a newspaper is just like shampoo
or a packet of noodles, so editorial is fair game. Take that analogy
further. Would Nestle deliberately put spurious stuff in its noo-
dles or soups to cut costs and increase profits? I do not think so.
Media companies manufacture content; the rest of it is packaging
and marketing. If the content is good, the business usually does
well. Some of the best news brands in the world, The New York
Times, Washington Post, The Economist, The Wall Street Journal
and so on, are the ones with the greatest credibility. There is no
conflict of interest between having a good, credible media brand
and a profitable one. It is a conflict that Indian media companies
are creating in response to their pressures. In fact, Indian pub-
lishers face less pressure than their Western counterparts who
are struggling in a market where people are simply not picking
up newspapers and magazines. India is at least a growing market.
The non-standard forms Another via media that several media
companies have hit upon is private treaties. In 2005, BCCL started
buying anywhere between 5–15 per cent stakes in small to medium
scale companies, such as Celebrity Fashions or Today’s Writing
Products. The idea is to ‘invest’ in firms that need mass media to
build their brands but cannot afford it. In exchange for the stake,
Print 9
BCCL offers a fixed amount of advertising space in its brands,

TOI or The Economic Times among several others. When these
companies raise money through an IPO,16 BCCL sells its stake.
That is when it makes its money. In many cases, it barters not
equity, but real estate or high value goods such as cars for media
space. At last count, BCCL had ‘invested’ in 175 companies. This
has since, become a favourite way for many media companies,
not just in print, to attract advertisers. BCCL’s argument is that
it is simply expanding the population of advertisers and actually
getting in companies that would not have perhaps explored mass
media options otherwise.
That is true. In a way, BCCL is getting in an entirely new cate-
gory of advertisers—small and medium companies—that would
have baulked at spending in the top media brands. However, to
my mind, there is an inherent conflict of interest in private trea-
ties, whichever the media company. In a private treaty situation,
a media company’s ability to make money on its exit depends—
among other things—on its ability to ensure that the stock does
not get negative coverage. However strong the editorial ethics
and policies at a newspaper company, the fact is the temptation
to either talk up the good news about a private treaty client or
ignore the bad news remains. Across the industry, a hot debate
rages on about this issue. However, no publishing company, for
all the public posturing on how truth matters, has spoken out
against this.
Falling Time Spent and Digital

Many analysts will add a third problem to these issues, the drop-
ping time spent on reading and the Internet eating away at print
revenues. According to IRS data, the daily time spent reading
print fell from 32 minutes in 2000 to 28 minutes in 2012 even as
the number of readers grew from 232 million to 351 million. So,
more Indians are reading, albeit for less time. However, this has
to be juxtaposed against the time spent on other media. Given
that all media in India is booming simultaneously, print has lost
surprisingly less reader time (see the series of tables and graphs
under Figure 0.1).
As for the Internet, until India’s literacy, electricity and broad-

band problems are taken care of, it is a long way from being a
threat to any media, let alone print. At last count (in December
2012), India had 127 million net users.17 This is more than 18
years after the Internet’s arrival in the country. You could argue
that if TV, which depends on electricity, could reach 153 million
homes and over 700 million people, why can’t the Internet?
Besides electricity, the big limitation on the growth of the Inter-
net versus TV is literacy and the ability to use computers and
software. This, say experts, is a gap that mobile Internet could
exploit better. The tablet already does it well. The many reading
apps available on tablets have brought hope to the print market.
For more details on how newspapers in the US are coping with
digital, see Caselet 1a.
The Trends, Opportunities and Growth Areas

Given all that is happening and the shape of the print industry in
India, the major opportunities and trends are:
Outsourcing
The growing belief in mature markets is that newspapers will
bounce back. However, they will not do so with the 20 per cent
plus margins that they are used to. And to make those sub-20 per
cent margins, they will need to take steps on the cost and invest-
ment fronts. Many of these present opportunities for India in ad-
dition to the opportunities that the domestic market already offers.
The shrinking of the print market overseas and the consequent
axe on jobs creates opportunities in India to manage outsourced
editorial, advertising or subscription work. More than half a doz-
en specialist firms, such as Mindworks Global Media Services,
are catering to this demand. Several mainstream media compa-
nies are also exploring it. Many newspapers in the US and Europe
have outsourced parts of the low-end work—pre-press, press and
post-press—to save money and streamline production.18 Some
newspapers are outsourcing ad production to companies in
India. A nine- to 12-hour time difference allows a design firm
based in India to turn over ads in 24 hours, returning them by
Print 11
the beginning of the American workday. However, outsourcing

is a somewhat sensitive topic and most American newspaper
and magazine publishers are loath to admit that they outsource
anything.19 The other issue is that with the market disintegrating
rapidly, what could they outsource? As one analyst says, if there
are no people reading newspapers then the issue is not just about
cutting costs, but about having newspapers in the first place.
Language Newspapers
While it is hardly a new trend, the growth of language newspapers
continues to surprise the market pleasantly. Hindi, Bangla,
Malayalam and other languages continue to grow as competitors
vie with each other to appeal to consumers in tier two and tier
three towns of India. These towns are now the new growth engines
of India. According to the FICCI-KPMG 2013, Hindi will grow
at a CAGR of 10.8 per cent from 2012–2017 compared to 4.8
per cent for English in the same period. Other languages, which
the report unfortunately doesn’t give a break up of, will grow at
10.9 per cent between 2012 and 2017. (See Table 1.2.) Hindi is
actually a good illustration of the kind of hyper-competition and
expansion happening in each of these markets. So do read Caselet
1b. However, the next round of hyper-growth and competition
will come from markets such as Bangla, Marathi and Malayalam,
which have seen a lot of action in the last two years. Also, there
is significant headroom for growth in these markets. This is
because against a 54 per cent share in total readership, non-Hindi
language print media got only 31 per cent of total revenues. For
a 36 per cent share of total readership, Hindi gets a 31 per cent
share of total revenues. This gap is much lower than it was, say,
a decade back. So just like Hindi has narrowed the gap between
share of readers and revenues, so will non-Hindi publications.
Niche Magazines
In 2011, the Association of Indian Magazine Publishers (AIM)
commissioned a qualitative research through Quantum and fol-
lowed it up with a quantitative one. The latter, done by Indian
Market Research Bureau (IMRB), surveyed 3,600 people across 10
cities. The findings, released in a series of presentations across the

country in 2012 are startling. They confirm something most of us
know intuitively—that we spend quality time reading magazines
and it is a media that engages us much more than others. More
than three-fourths of the people who read magazines do so to relax
and when they are alone. More than 87 per cent of them do not
do anything while reading a magazine. And magazines have the
lowest ad avoidance compared to newspapers, television or radio.20
Now factor in the number of foreign publishers coming in, the
number of titles launched, or the rise in ad spend.21 There are cur-
rently an estimated 6,000 odd titles competing for revenue of `16.5
billion (advertising plus pay) pie that is growing in double digits.22So,
the whole ‘magazines are in decline’ thing is somewhat exaggerated.
The reason magazines show poorly on readership data is be-
cause the IRS was designed for large circulation products. It
catches unerringly the stagnation and decline in news magazines,
which dominate the numbers and therefore the sentiment.
There is a lot of growth, especially for specialised consumer
magazines such as GQ, Dataquest or Cosmopolitan or for busi-
ness-to-business ones, such as Power Line. Till very recently, spe-
ciality magazine publishers used existing surveys and metrics,
which do not flatter them, to sell. The entry of foreign publishers
such as BBC or Axel Springer and FIPP (a global magazine media
association) who have tackled similar problems across the world
changed that. Maheshwar Peri, the head of Pathfinder Publishing,
says that FIPP pushed AIM to do the survey, a la other magazine
associations across the world.
For many publishers, shrinking home markets have pushed
them to look at India, China, Brazil and Russia. India has the added
advantage of a large English speaking population (over 100 million).
Additionally, the Indian market is at a stage where publishers are
looking to launch specialist titles since general interest magazines
are in decline thanks to news channels and the Internet. The
regulatory regime for magazines in India is pretty simple—100 per
cent foreign equity is allowed for specialised titles. Publishers such
as The Outlook Group, the India Today Group and ABP Limited
have been launching several titles in quick succession with British,
American or German publishers, among others. Brands such The
Rob Report, GQ, Forbes India, Fortune, among dozens of other
foreign titles, have been launched in the last five years.
Print 13
These could be licensing or franchising arrangements, joint

ventures or direct launches on their own by the overseas publish-
ers. There are hundreds of unexplored or under-explored niches
in India—from pets, to children, to office décor to holidays. The
coming of telecom, retail, golf and wedding magazines—among
dozens of others—for special groups of consumers or speciality
consumer magazines even as similar BtoB titles are launched for
people in the trade is a welcome trend.23
Local Newspapers
The growth of the language press has proved the latent demand
and the need for news in the languages that people are comfortable
with. Localisation will now move beyond just language and plug
into localities, areas or even mindsets—what in mature markets
is being called the ‘hyperlocal’ approach. There is already a slew
of papers that offer local news—some are free, some paid for and
others as a supplement of national newspapers—for example, An-
nanagar Times in Chennai and iNext in 12 cities across the Hindi
belt. The idea is to plug into the local community and its problems
and offer this local audience to both local and national advertisers.
‘The local advertiser is more demanding than the national one be-
cause he wants to see a correlation between sales and advertising,
he wants those walk-ins. Once you succeed locally, you succeed
nationally,’ says Sanjay Gupta, editor and CEO, Jagran Prakashan.
However, there is not enough enthusiasm about local news-
papers yet. According to one publisher, local newspapers don’t
make enough money because advertisers don’t take them seri-
ously. That could be either because of the outrageous circulation
claims made by publishers or because it is more lucrative for
the distributor to sell the paper as raddi—or waste—and make
money. In fact, some of the local experiments such as Metro from
Mid-Day Multimedia in Mumbai have been shuttered.
Free Publications
In mature markets, free newspapers are helping stem the slide
in circulation. It all began with the Swedish Metro in 1999. Now
dozens of mainstream titles in the US and Europe—from Time
Out magazine to the Manchester Evening News—are going free

in a bid to stem falling sales. Most European newspaper groups see
these ‘freesheets’ as a way of reaching new readers while offering
advertisers access to a previously hard-to-reach market—young
urban commuters. Freesheets are usually heavy on entertainment
news and gossip. Articles are short and the tone is light. This often
works. The free newspaper trend dovetails very nicely with the
growth in the demand for local newspapers. Yet, not too many
newspaper companies in India are keen on them. That is because
the most expensive Indian newspapers retail for a fraction of what
it takes to produce them. Most are, for all practical purposes, free.
In mature markets, newspapers are priced because companies
make money on them. In India, they are priced so that a distri-
bution system is incentivised. This means that, by putting a price
tag of `1–4 on a newspaper, publishers ensure that the retailer
makes more money from selling it to a consumer than from sell-
ing it as raddi or for recycling. This happened a lot in the 1990s.
To show increased circulation, many newspapers cut prices. This
created a situation where hawkers kept taking additional copies
because they could make more money by selling them as raddi
(recycled paper). So, even while the newspaper was not being
read, it showed circulation increases. (Raddi, incidentally, is a
completely Indian concept.)
Tabloids
By the end of 2012, more than 100 newspapers across the world
had moved from broadsheet format to compact, Berlinner or
tabloid. The last big brands to do that were The Age and The
Sydney Morning Herald, from Fairfax Media. This was done
primarily to cope with falling circulation, to cut costs and also to
appeal to younger audiences. The reshaping has had some impact
on circulation. The Times in London, and The Independent, both
saw double-digit circulation rises, but this was in the short run.24
In the long run, the decline in sales has continued. In India, Mid-
Day is probably one of the oldest tabloids. In 2007, Mail Today
was launched in tabloid form. In the same year, the financial daily
Mint (from HT Media) made its appearance in the Berlinner
format. Besides upsetting printing schedules and making it
Print 15
more convenient for people to hold the paper, how size impacts
either revenues or profits is hazy. In the UK market, one clearly
identified downside of cutting size is that a tabloid delivers 10 per
cent less saleable advertising space than does a broadsheet. The
long-term impact of going smaller is not clear.
Other Media
The rise of the Internet, mobile and other media offers publishing
companies growth opportunities. Many are investing heavily in
outdoor, events and in radio because the local connect is stronger.
It becomes easier to get a national advertiser with a large footprint,
but who wants specific local solutions. Adding, say, hoardings in
Kanpur to the local edition and a brand activation or two, helps
a newspaper charge a premium or get a larger share of the adver-
tiser’s wallet.
The Past
The Beginnings
James Augustus Hicky, a ‘rambunctious and irreverent English-
man’, gave India its first newspaper in January 1780.25 The weekly
Bengal Gazette, also known as Hicky’s Gazette, was a rag of sorts
with gossip about English society in Bengal, the centre of the
British East India Company’s existence at that time. More than a
year later, in June 1781, he was in jail for defamation. Undaunted,
Hicky edited his paper from jail and his audacious column con-
tinued to appear. After a second prosecution in 1782, his press
was confiscated and his career as an editor came to an end.
If that seems to have been an unpromising beginning for India’s
publishing industry, it was not. Here was an Englishman with the
impudence to question the governor general and chief justices
appointed by his own country. Hicky symbolises, in many ways,
that essential element of a vibrant print industry—freedom.
Combine that with the other element—that of government cen-
sorship and control. Across the developed and developing world,
the history of the press is littered with examples of governments
trying to browbeat, scare, cajole and bludgeon the freedom that

the Hickys of this world want—to write what they think—for the
people who want to read it.
In the end, this freedom survived. It did so partly because
there was a business in selling books, periodicals, newspapers,
pamphlets, fliers and other such material to people. It survived
because people paid good money to read them. It thrived be-
cause other people—advertisers—paid even more money to
reach the people reading them. This happened in spite of gov-
ernment attempts to choke newsprint supplies, to cut off power
to newspapers or to censor them outright, as for example, dur-
ing the Emergency (1975–77).
By the time the first newspaper was launched in India, print-
ing was a booming industry elsewhere in the world. The Chinese
who invented ‘moving metal type’, printing somewhere around
970, did not find much use for it.26 Neither did the Koreans who
apparently invented it in the 14th century. The Chinese language
is based on approximately 40,000 distinct ideographic charac-
ters. The Chinese found that traditional woodblock printing
was easier to handle such a complicated script. The Koreans
came to the same conclusion and they too abandoned the
movable type technology. No wonder then that history crowns
Johannes Gutenberg of the German town of Mainz as the in-
ventor of printing. In 1455, with the help of a ‘movable type
press’ based on the winepress, the Gutenberg Bible became the
first substitute for the handwritten or manuscript book. It took
two years to complete and the business of printing took off. The
first big customer was the church, which wanted copies of reli-
gious publications in the form of pamphlets, books and book-
lets, usually in Latin.
In India, after Hicky’s Gazette, came a succession of newspa-
pers and periodicals, several of them out of Bengal and many
created by Englishmen. There was the India Gazette, another
weekly from B. Messink Welby and Peter Reed in 1780, and the
Calcutta Journal, a bi-weekly from James Silk Buckingham in
1818. The first Indian-owned, Indian language newspaper was
launched—rather appropriately—by the noted social reformer,
Raja Rammohun Roy, in 1820.27 Sambad Kaumudi was a weekly
Bengali newspaper. Between 1780 and until India’s independ-
ence in 1947, more than 120 newspapers and periodicals were
Print 17
launched in almost every Indian language: some were owned

by Englishmen, others by Indians, and still others by missionar-
ies. Almost all of them began with a cause—either to speak out
against British imperialism or to spread the message of Christi-
anity among the ‘natives’. None of them, it seems, had making
money as its primary objective.
The Pre-independence Years

India, in those days, was struggling to discover its identity and fight
British rule. The need of the hour was to spread the message of
independence. Newspapers sprouted all over the place—and shut
down with equal speed. Many editors of defunct newspapers usu-
ally managed to get the funds to start another one. Roy started the
first Indian-owned English daily, Bengal Gazette, in 1816. When
the newspaper shut down, he launched Sambad Kaumudi, which
shut shop in 1823. Before that, in 1822, he started the Persian
weekly, Mirut-Ul-Akhbar (Mirror of News). This too shut down
eventually. Another of his publications was the religious Brahminical
Magazine brought out to counter missionary propaganda.
In the south, The Malayala Manorama, now one of the largest
selling dailies in India, began as a weekly in 1888. The first editorial,
recalls Mammen Mathew, managing editor and grandson of one
of the paper’s founders, was about free education for untouchables.
It was distributed by boats or cars borrowed from rich family
members. For over nine years between 1938 and 1947, the Diwan
of Travancore shut down the newspaper because of its demand
for an independent Travancore. It was only because the family
owned a rubber factory and a bank, among other businesses, that
the newspaper was able to re-launch in 1947. By 1953, Malayala
Manorama had a circulation of 35,000 copies but was still not
making money. ‘Till the sixties it was a hand-to-mouth existence,’
says Mammen Mathew. That’s when one of the family decided
that it was necessary to be profitable. This essentially meant an
emphasis collecting ad revenue.28
The aim of these newspapers was always a cause, a revolt, a mes-
sage, and a tool to counter propaganda or spread some of their
own. Many of the top publications today are the ones that have
lived through the freedom struggle. Times of India (TOI), Mumbai
Samachar, Malayala Manorama, AnandaBazar Patrika (ABP) and

The Hindu, among others, are all veterans of the Indian freedom
struggle. It is ironical that these cropped up and played a role in
bringing down the British Empire in what was then, a largely il-
literate country. Many were financed by benevolent or patriotic
businessmen or through public donations. Even after Independ-
ence, most had a cause to see to the birth of a nation and to watch
over it in its early years. Several wealthy businessmen continued
to support these newspapers. They could afford to do so because
most had other successful businesses: for example, the Goenkas
who owned Indian Express also owned real estate.
For a very long time, the Indian newspaper industry could
not or would not get out of the ‘I am here to fight a battle, not
to make money’ mindset. While it was one thing to have that
approach during the fight for freedom, things continued that
way for decades after India had achieved independence. Because
they were family owned, newspaper firms never looked beyond
their own general reserves and the owner’s limited vision for
growth. Though most dailies in the US, for example, also began
as family-run businesses they soon grew, became profitable,
raised money, listed on stock exchanges, expanded into other
media and did all the things that Indian publishing could not.
The 1950s
The only recorded instance—of a look at publishing as a business—
that I came across was in the First Press Commission’s report
(1953). Appointed by the Indian government to look at press
laws in the light of the country’s freedom, the commission took
a detailed look at the capital invested, returns generated, rev-
enues and costs of newspapers. However, like many other things,
the report is a product of its times. The heavy influence of social-
ism—and the notion of protecting anything small against any-
thing big—is in evidence throughout the report. It talks about
trying to limit the growth of large metropolitan newspapers.
There is a proposal to make it mandatory for large newspa-
pers to increase their price when they increase their pages.
This proposal later morphed into the Newspapers [Price and
Page] Act.29 For some sense of what the thinking was in those
Print 19
days, sample one comment from the report: ‘The great advan-
tages possessed by the metropolitan press has tended to draw
away from the districts the talent that might have gone into the
development of a local press. We do not consider concentration
of the press in metropolitan cities a desirable feature, however
inevitable it was in the early stages.’
The meat for this book, however, is in some interesting tidbits
in the chapters on the economics of newspapers and capital
investment. A sample of 127 dailies had total revenues of `110
million. The split between circulation and advertising revenues
was a healthy 60:40. It showed that the industry was not
completely advertising driven and that readers were paying the
bulk of the cost of producing and selling a newspaper. Currently,
on an average only 5–15 per cent of the revenue of an English
newspaper is recovered from circulation revenue. Advertising
is the biggest and only alternative source for most newspapers.
A few things remain constant. It was an owner-driven, capital-
intensive, long-gestation business and it remains that way. Out of 47
companies (for which the commission had figures) only the 19 that
were more than 15 years old gave a return of more than 10 per cent
on capital invested. As a whole, the industry generated a profit of
`0.6 million or less than 1 per cent on a capital investment of about
`70 million. The calculation may look rather simplistic. However, it
provides a rough and ready indicator of what the industry looked
like in 1951, the year for which these statistics were calculated.
Why then did proprietors continue to remain in the business?
According to the Press Commission’s report, there were two
reasons. One, because the rest of the industry was flush with
post-second-world-war profits which were parked in various
businesses. Print was one of them.30 Two, as the Commission put
it, money also came in ‘from persons anxious to wield influence
in public affairs. The fact remains that as an investment a new
newspaper undertaking does not look very tempting.’
Many of the things the Press Commission said in its 1953 report
remain true today. Newspapers continue to be a capital intensive,
long-gestation, low-return business. So why do people continue to
be drawn to it? As before, there are two reasons for that.
First, if you are the leader in the newspaper business you tend
to get a disproportionate share of revenues and profits. BCCL,
which publishes India’s leading English daily TOI, generates

anywhere between 25–35 per cent in operating profits. In the
financial year 2011–12 its profit after tax was `5.71 billion on a
revenue of `48.52 billion.
The second reason remains the same as that in 1951. News-
papers are still treated as tools of influence. The actual losses of
the business, when weighed against the power it gives a business
house or an individual in the corridors of ministries, seems to be
a small price to pay. You could actually say that lobbying would
have meant spending at least that much money. This is evident in
the fact that while the Registrar of Newspapers for India (RNI)
has more than 86,754 titles registered with it, only 1,000 are
members of the INS. The number of Audit Bureau of Circulations
(ABC) members is even fewer at 411.31 Every serious publishing
house is a member of these bodies. Many companies and people
just register a newspaper title. They then use it for purposes other
than to make money from the newspaper.32
The 1960s and the 1970s

The ‘business’ of publishing was also a difficult one to be in. The
low returns and high capital investment in the business were
combined with an acute shortage of the primary raw material,
newsprint. Many major events in the business can be correlated
with the rise and fall in newsprint prices.
Tough Times
To this, add tight governmental controls on it through the News-
print Control Order of 1962. It acted as an indirect hold over the
industry. There were quotas based on the number of pages a news-
paper or magazine had and its circulation. Every few months, pub-
lishers had to apply to the RNI for newsprint quota with a chartered
accountant’s certificate as proof of circulation. Publishers tried to
get their quota increased through all sorts of means, say insiders.
Even if a publisher got a big quota, under the control order, only
30 per cent of his total requirement could be imported and that
too only through the State Trading Corporation. The remaining
70 per cent had to be purchased from domestic, usually state-held
Print 21
newsprint producers. Most of these sold poor quality newsprint at

the landed price of the imported material.33
Then there were the problems of importing printing machin-
ery, a nightmare, with duties as high as 100–150 per cent in some
years. The cost and headache involved, and the other sundry
permissions required from the Reserve Bank of India (RBI) and
the RNI ensured that importing the equipment never ever paid
back in increased efficiencies. There were also arbitrary levies on
newsprint, a wage tribunal that mandated salaries, so on and so
forth. Get a publisher to recall the 1960s and 1970s and all he will
talk about is what a nightmare it was to simply get the newspa-
per out every morning. Investing in technology, systems, people
and expansion was beyond the scope of what they were occupied
with in those days.34
The other indirect tool was the Press Council, a statutory
body formed during Indira Gandhi’s regime. Her father, Pandit
Jawaharlal Nehru, clearly did not want to mandate the formation
of a press council. As prime minister, he believed that even a
bad press was acceptable as long as it was free and self regulated.
The first Press Commission had suggested a mandatory Press
Council, but the bill never got past the Lok Sabha, and finally
lapsed before being revived during the Indira Gandhi years.
Her government’s time was marked by political, social and eco-
nomic turmoil, much of which was blamed on the press. All of
this culminated in the Emergency declared on 25 June 1975. One
of the tools to harass the press then was to cut off the power sup-
ply to Bahadur Shah Zafar Marg, New Delhi’s Fleet Street, which
houses some of the largest publishing companies in India. The next
18 months saw the most humiliating period in the Indian press
history. During this time, several laws were amended and others
passed making it almost impossible to criticise anything that the
government did. The censorship meant newspapers could not re-
port what was actually happening. This gave birth to underground
magazines reporting on the realities of India.35
Growth, Change and Languages

The transformation of the publishing industry into a business
began post-1977, after the Emergency was lifted. The Janata gov-
ernment, which came to power in the post-Emergency elections,
repealed most of the regressive laws. Across the country, people

bought more newspapers because they wanted to know what had
happened in the preceding months. The best account of these
years is recorded in a series of 11 essays on the language press
and a book, both by Robin Jeffrey (2000). In the essays and the
subsequent book, Jeffrey traces the growth of the Indian lan-
guage press from 1977–99.36 He puts it down to three factors: the
growth of literacy, the rise of capitalism and the spread of tech-
nology. The last refers to offset printing technology coupled with
communications technology that allowed the use of facsimile or
satellite editions. The 1970s and the 1980s are littered with exam-
ples of new companies and brands that hastened to tap into this
growth and make money.
Ramoji Rao was clear from the beginning that he wanted a
newspaper for Andhra Pradesh that would bring local news to local
readers. He already had several successful businesses—Margadarsi
Chitfunds, Priya Pickle as well as hotels. When he decided to launch
a newspaper from Visakhapatnam in 1974, Indian Express’s Andhra
Prabha was the leader with 74,000 copies. The second newspaper,
Andhra Patrika, was losing circulation. In 1975, when Rao’s Eenadu
was launched in Hyderabad it divided the city into target areas,
recruited delivery boys three months before publication and gave
away the newspaper free for a week. In each subsequent town that it
was launched (Tirupati, Ananthapur, Karimnagar and others), the
newspaper was marketed in an interesting new way. By 1978, within
four years of its launch, Eenadu had surpassed Andhra Prabha’s
circulation. By 1995, two rivals—Andhra Patrika and Udayam—
had folded up and Eenadu commanded 75 per cent of the audited
circulation of Telugu dailies.37
Meanwhile, in 1979, Mumbai saw the launch of its first success-
ful afternoon daily, Mid-Day, which eventually led to the closure of
TOI’s Evening News. The 16-page tabloid was priced at 25 paise.38
It was successes such as Mid-Day and Eenadu that pushed other
proprietors to invest in offset technology, satellite editions and dis-
tribution to improve circulation. The old set of proprietors finally
began to view their publications as a business while the newer ones
looked at it as nothing but that. It seems rather obvious today,
but remember that we are talking about a time when editorial,
marketing and circulation operated on different planets. There
Print 23
was seemingly no connection between what people wanted to read

and how the product was to be marketed or sold.
Magazines Take Off

‘With India Today (launched in the mid-1970s) independent
magazine publishing got a boost,’ says Maneck Davar, owner of
Spenta Multimedia. Till then, the idea was that only big publish-
ing houses had the financial muscle to launch their own maga-
zines. India Today, together with Sunday, Stardust with Savvy,
Debonair and Society set off a trend of sorts.
These magazines took off because they offered much more than
the staple political fare that the newspapers of the time did. They
gave readers a mix of features on politics, films, home, women
and lifestyle. A lot of this was in colour, then a new element. It
also made a huge difference to how much advertisers and read-
ers were willing to pay for the same product. Chitralekha, a small
Gujarati magazine, was one of the first to take to offset printing
in the late 1970s and got its first computer in 1981. As a result, it
could take colour ads and pushed up its cover price from 60 paise
to `1.80. ‘It paid rich dividends,’ remembers former associate
publisher Bharat Kapadia.39 The quality and newsiness improved
and deadlines shortened. A cover story that had to be released 10
days prior to hitting the stands could be sent in for printing five
days earlier. Magazines could be more ‘newsy’. It also gave the
marketing department the flexibility to accept a colour ad closer
to the press deadline.
Sensing an opportunity, newspapers launched supplements
in black and white and colour. ‘Colour,’ thinks Cyriac Mathew,
chief operating officer, Mid-Day Multimedia, was ‘the next big
revolution for newspapers.’ The Saturday Times, The Sunday Re-
view, Brand Equity and a whole lot of other colour supplements
were a response to the success of general or specialised maga-
zines around 1990. Eventually, they did help newspapers suck
back ad revenues from magazines. It was an indolent time. The
business had the luxury of time to deal with its own problems.
That is because TV had still not taken off in India. Roughly, 80
per cent—may be more—of the total advertising spend in 1980,
went to print. Doordarshan (DD), radio and cinema got the rest.
The Samir Jain Years

Tariq Ansari, Managing Director of Mid-Day Multimedia, joined
his father’s newspaper business in 1983. When asked to name the
big milestones in the newspaper business in India, he immedi-
ately mentioned the entry of Samir Jain. It is an opinion cutting
across publishing companies that the biggest change in the ‘busi-
ness’ of publishing came with the entry of the reclusive Jain. Most
young newspapermen who took over their fathers’ businesses in
the early 1990s use Jain and BCCL as benchmarks of what they
want to achieve. The story of how he used simple marketing
principles and good business sense to transform the down-in-the
dumps publishing company into a profit machine is documented
in a cover feature that Businessworld magazine did in 1995.40
From `47 million in 1987–88, BCCL’s profit before tax jumped
to `1.3 billion on revenues of `4.79 billion in the 12 months
ended July 1994. Currently, BCCL is one of India’s largest me-
dia companies at `48.52 billion in revenues and `5.71 billion in
profit after tax in July 2012.41 ‘The Jains were the first to look at
return on investment, pricing, promotion. That’s their outstand-
ing contribution to the business’, thinks Ansari.
While many publishers criticise Jain for starting the price wars
and eroding circulation revenue, most followed his lead. They
added more colour, pushed up circulation, added more finesse
to their marketing efforts and reaped the benefits. Many Hindi
dailies like Dainik Bhaskar, Dainik Jagran and Amar Ujala took
several leaves out of the TOI book. ‘In the ’90s we went into
expansion and for the first time saw profits in millions,’ says
Mammen Mathew. Adds Murali of The Hindu, ‘The business
mentality started creeping in in the ’90s.’ G. Krishnan, the former
CEO of TV Today Network and an old TOI hand, remarks, ‘Till
then the market was driving media; by the late ’80s media started
driving the market.’ ‘It [price cutting] spread like a disease. But the
flipside [of Jain’s contribution] is that newspaper managements
woke up,’ adds Shobha Subramanyan, formerly of ABP.
Through his utter devotion to the bottom line, Jain managed
to bring about a mindset change desperately needed at that point.
His timing was impeccable. It was not only Jain’s example that
other newspaper proprietors were following. The post-liberali-
sation air was also opening up opportunities for them. By 1992,
both newsprint and printing machinery were placed under the
Print 25
open general licence, making their import easier.42 Add to it one

other fact. Advertising too was changing hands with multina-
tional corporations (MNCs) taking charge of the ad industry.
Says Subramanyan, ‘They [the foreign agencies] had a different
mindset.’ It was one that matched TOI’s.
As an aside, also notice that the industry was so busy discover-
ing the business of publishing that it missed the opportunity of
the future—TV. It was during these years that cable was taking off
in India, but except for BCCL, Living Media and Business India,
nobody saw an opportunity in broadcasting or cable. It took a
CNN and a Star TV to make publishers realise the potential in
broadcasting. Many then scrambled into it—Hindustan Times,
Eenadu and Living Media, among others.
The Satellite TV Years

When satellite TV finally took off in 1995, print was growing—
in editions, products, revenues and size.43 It had a dominating
70 per cent or so of the advertising market. Rate negotiations
were unheard of. However, TV did eventually change the press.
‘Television changed the concept of news in print and because
television is good at certain things, print had to adapt,’ says Vinod
Mehta, the former editor-in-chief, Outlook Group. TV made
newspapers less newsy. They could not just report the news; they
had to offer analysis and informed opinion on it. Besides news, TV
was also eating seriously into the share of entertainment reading.
With TV broadcasting the news, in addition to entertainment,
sports and a whole lot of things, general interest magazines
suffered. And special interest ones took off. By the end of 1992, on
the back of the primary issue and technology boom, specialised
magazines were picking up speed. A&M, Dalal Street Journal,
Dataquest and Health & Nutrition, among a host of others, sought
their readers and actually managed to expand the market.44
By 1997, however, things started going wrong. The ad industry
went into a slowdown; TV began eating into print’s share of the
audience and ad-spend. Newsprint prices started rising again.
Print companies reacted by pushing up ad rates. That year also
saw another trend—of local print brands taking off across the
country. While national newspapers took a share of it with city and
suburban editions, local newspapers too jumped into the fray.
The FDI Years

In India, proprietors’ love for their stake in the company has proved
to be stifling. Most of them are used to dominating small regional
markets and have long been protected from any competition except
from domestic companies. That is, of course, part of the heritage of
having newspapers that began as nationalistic vehicles. Add to it the
fact that a 1955 cabinet resolution did not allow foreign investment
in print. In any case, most publishers did not even feel the need for
capital since other businesses were bankrolling this one.
It was when expansion became an imperative in the early 1990s
that the clamour for allowing foreign capital went up. In 1993,
when ABP wanted to tie up with the Financial Times, it made a
proposal to the government, and the debate about allowing for-
eign money in print started all over again. When media valua-
tions were running high in 2000, some like Mid-Day decided to
offer their shares to the public. When Mid-Day’s public issue was
about to hit the market in the early part of 2001, rather belatedly
the government realised that FIIs too could trade in its shares or
pick up at least 40 per cent equity. Overnight, the RBI changed
norms to disallow FIIs from investing in publishing companies.
Finally, under pressure from many publishers, the government
allowed 26 per cent FDI into Indian print in June 2002. Since
there were too many restrictions, which meant not too many
investors came in, this was liberalised further in 2005. That is
when FIIs were allowed to be a part of the 26 per cent foreign
cap. These two decisions set in motion the process of thinking
about surviving in a competitive—rather than a protected—
environment.
Meanwhile, a generational shift was taking place across the
country: young blood had begun taking over the business. From
Malayala Manorama in Kerala to Jagran Prakashan in Uttar
Pradesh, almost every major publishing company in India has
seen younger managers, usually the sons, nephews or heirs of the
publishers taking over. Many of them had been educated abroad
and wanted to grow their businesses. It was a young Samir Jain
who had taken over an ailing BCCL in 1986 and transformed it
into one of India’s largest and most profitable media company.
This transformation was being repeated in almost every major
publishing house in India.
Print 27
These young print barons actively sought expansion, capital,

partners and competition, something their elders, brought up in
a different era, did not. The first big investment in print came in
2003 when Henderson Asia Pacific Equity Partners picked up a
stake of over 19 per cent in HT Media for about `1 billion. Others
like Business Standard–Financial Times45 and Jagran Prakashan–
Independent followed. It was Hyderabad-based Deccan Chronicle
Holding’s primary issue in 2004 that gave the market a big
impetus. Its issue was oversubscribed 9.5 times.46 In August 2005,
HT Media raised `4 billion and made it to the top 10 media IPOs
in Asia over 2004 and 2005.
The Way the Business Works

The Variables
The numbers for revenues and costs, and, therefore, margins in
publishing, depend on several factors:
Position
This variable applies to most if not all media—the number one
or two in a market get a disproportionately higher share of
revenues. The number three and four usually just about survive.
For instance, in Mumbai, the market leader, TOI, gets the lion’s
share of ad revenues directed at the city. Hindustan Times, Mid-
Day or DNA do not yet get a decent share of the ad pie. The same
is true in virtually all the other cities.
Language
The whole cost–revenue equation changes drastically from
English to other languages and even within languages at times.
The typical circulation to readership ratio in English is 1:1.5 or
2, whereas in Hindi and other languages it is 1:4 or more. Add
to this another fact: most language publications like Malayala
Manorama or Dainik Jagran have a very high circulation. This
in turn means extremely high printing costs. Typically, even top
language brands cannot charge more than, say, one-third the ad

rate of an English language publication. According to one sta-
tistic, an English reader is valued five times more than a Hindi
reader and 13 times over a non-Hindi, language reader. This is
largely due to a perception of better demographics.47
Language papers recover money by having a cover price that
gives them at least 30–45 per cent of their revenues. English
newspapers on the other hand get only 5–15 per cent of their
revenues from their cover price. Language publications are big-
ger and faster growing. Going by IRS 2012 data, the largest sell-
ing Hindi newspaper, Dainik Jagran, has more than 16.5 million
readers while the largest selling English daily, The Times of India
has 7.6 million readers.48(See caselet 1b).
Newspapers versus Magazines

Again, the whole cost–revenue equation changes from newspapers
to magazines, because everything from the quality of paper, to fre-
quency and depth of content changes. In 2012, at `16.5 billion in
revenues, magazines had, roughly, a 7 cent share of the overall print
industry. In general, the magazine business has been under attack
largely because newspapers have taken over many of special fea-
tures that magazines earlier offered—in-depth coverage, opinion,
analysis. For example, general news magazines are the ones most
hit by the boom in news channels, Internet and mobile news out-
lets. As a result, the overall reach of magazines declined from 90
million in 2008 to 83 million in 2012. This, however, includes only
mainstream magazines. Speciality consumer magazines or BtoB ti-
tles have in fact led the growth of magazines in India in recent years.
The Economics
Costs
The cost of producing a newspaper or magazine depends on the
number of pages, the extent of colour used, the quality of paper,
circulation, and the degree of competition in the market, among
several other factors. These could change from year to year. The
typical cost heads are:
Print 29
Production/printing These are variable costs which vary

with the size of the print run. Newsprint forms 50–60 per
cent of the production cost, and its prices oscillate any-
where between US$ 400 to 1,000 per tonne, depending
on demand. The more the number of copies printed, the
more money is lost—unless every jump in circulation
fetches an increase in advertising revenues that is more
than or equal to, the rise in printing costs.
Typically, advertising revenues have subsidised the real
price of newspapers for readers. According to one calcu-
lation, a newspaper costs anywhere between `15 to `20
to produce, but it sells for Re 1 to `4.49 Assume that it sells
for Re 1 to `2.50 like most English dailies. That would
bring back roughly Re 0.6 to `1.5 back to the publisher’s
kitty after taking out trade commission. In the years that
the ad spend on print was growing slowly, there was no
incentive to invest in circulation for it would eat into prof-
its. Many leading newspapers and magazine companies
deliberately cap circulation. It is routine for publishing
companies to drop in and out of ABC in the years when
newsprint costs are high. Those are the years they do not
spend on increasing circulation.
A distinction has to be made here between language
and English newspapers. Paradoxically, though the for-
mer reaches a less affluent audience, the cover price is
higher. This could range between `2.5 to `5 depending
on the language and also on whether it is a weekend edi-
tion. This is because even with higher circulation, the
ad rates they can command are significantly lower than
those for English newspapers. The actual proportion var-
ies across brands, languages and regions. English newspa-
pers usually get anywhere between 25–50 per cent more
on cost per thousand, according to one estimate.
People costs What remains more or less fixed is staff costs
and other overheads. Roughly, people costs vary between
12–20 per cent of revenues depending on whether it is
English or an Indian language publication. Over the past
few years, however, as more brands have been launched
and competition has increased, there has been a shortage
of people in the business. As a result, people costs have

gone up by about 2–4 times of what they were in 2006.
Marketing costs This is a new imperative in the age of
multiple editions and multi-media competition. To ward
off competitors within print and from TV, radio or other
media, it is crucial that a brand creates its own identity. A
magazine such as Time Out does not only compete with
Delhi Beat or First City, its main rivals in the magazine
business. It competes with the weekly supplements of
mainstream newspapers. So, Delhi Times, Mumbai Times
or Mumbai Mirror are active competitors. When it comes
to the advertiser’s priorities it competes with everything
from NDTV Good Times, a lifestyle channel, local cable
channels, local radio stations and outdoor media. Fur-
ther, when it comes to the reader’s attention, it fights with
anything—general magazines, TV channels like Star Plus
or Zee TV or even a visit to the theatre. The battle is for
the reader’s time. To get more of it, Time Out has to stand
out. It has to offer a compelling reason to be bought and
read, which is where marketing helps.
Distribution costs This includes trade margins and the
cost of returns or ‘unsolds’ (the copies that come back).
Mumbai has an estimated 70 depots or points where news-
papers are dropped. There are an estimated 10,000 stall
owners and hawkers who pick up the newspapers from the
depot when they are dropped there, usually around 3 to
3:30 in the morning. Hawkers then pass the papers on to
line boys who drop the newspaper in homes, usually by 6
to 7 am. This is called ‘line sales’ in industry parlance.
The hawker who collects the money from readers’
homes usually pays the salaries of the line boys. The
hawker, in turn, makes anything between 18–25 per cent
on the cover price of the newspaper. The commission
could vary according to the publication, the area, the city
and the norms there. It could be significantly higher if the
newspaper or magazine is not an ABC member and there-
fore not subject to its rules. The unsolds are a regular part
of the business; the average volume of these returns varies
between 1–5 per cent depending on the city and its trade
Print 31
norms in the case of newspapers. In magazines, unsolds

could be as high as 10–25 per cent, moving progressively
upwards as the frequency of the magazine increases.
According to one analysis for large publishing brands
such as TOI and Dainik Jagran, selling and distribution
expenses are roughly 7–8 per cent of gross sales.
Revenues
Revenues essentially come from the following:
Circulation This is the money brought in from the cover
or retail price of a magazine or a newspaper after deducting
trade margins and the cost of unsold copies. The ratio could
change depending on a number of things—circulation,
language, price and frequency.
Advertising About 80 per cent of a publication’s revenues
come from advertising, and the rest from circulation. This
again could vary by language, frequency, price, the market
it addresses, and so on. The best way to look at ad growth
is to look at both advertising rates and volumes.
Subscriptions Inspired by publications like Reader’s
Digest, magazines such as Outlook or Femina launched
high-profile subscription schemes. Earlier, these were
treated as a revenue stream. The fact is that most subscrip-
tion schemes are subsidised with free gifts. While they do
bring in cash they also involve a huge cost, of more copies
to be printed, transported as well as the cost of marketing
the subscription offer. So, subscription schemes are really
about buying circulation—unless the magazine is actu-
ally making a profit on every additional copy sold to the
subscriber, which it does not. Most subscription schemes
are used to ramp up circulation numbers and demand a
higher rate from advertisers.
Brand extensions There are several ways in which
a magazine or newspaper can extend the same brand
to tap into different revenue streams. These include,
among others, events, TV programmes, compact discs
(CDs), seminars, roundtables, syndication of content

and education. This is especially true for specialised
magazines or papers. ‘For us they started off by helping
the print brand grow, now they contribute to the top
line and bottom line,’ admits Shyam Malhotra, former
director at Cybermedia, a specialist technology-
publishing firm. In many specialist media companies,
brand extensions could bring in anywhere between 30–
50 per cent of revenues.
Internet/Mobile/Apps Most Indian newspapers and
magazines have been ramping up their Internet and mo-
bile presence to generate revenues using their original
content. However, both are not yet significant contribu-
tors to revenue except in the case of BCCL where the In-
ternet brings in under 10 per cent of the total revenues for
the company.
The Metrics
The Backdrop
There are all kinds of metrics used in the publishing business—
to measure the efficacy of a brand or a title from an advertiser’s
perspective and to measure the efficacy of the business from an
owner’s perspective. The latter will be tackled in the section on val-
uation; here, we will look at it from the advertiser’s point of view.
Until satellite TV took off in 1992, buying and selling space in
newspapers was a simple affair. A media buyer had to figure out
which market a brand was addressing. He would then advertise
in the leading dailies and magazines in that market and decide on
how best to spread the budget among them. The media, in order of
importance were: dailies, magazines and DD, remembers Apurva
Purohit, who entered the business in 1991.50 Purohit was a buyer
for many years. Since the magazine boom was still going strong,
the real analysis took place while buying magazines. ‘Should I take
the cover story or the back cover, is there an editorial fit between
the magazine and the brand,’ are the kind of decisions Purohit re-
members making. Innovations that would make an ad stand out in
Print 33
a magazine were just about beginning to happen. For a skin-care

product, one brand attached a tissue for readers to test how clean
their skin really was. ‘We used to analyse magazines then the way
we analyse niche channels,’ remembers Purohit.
In the late 1980s and early 1990s, buyers did not negotiate with
newspapers: they usually took whatever rate they offered. ‘Print
used to be the toughest to negotiate with,’ remembers Gita Ram,
another former media buyer. A big media buyer like Hindustan
Unilever Limited (HUL) probably got a discount for signing a
contract. A contract meant that it was committed to, for example,
ads of 2,000 column centimetre (cc) in a certain publication for a
year. This meant that it could get a bulk discount. The only ones
offering discounts were the magazines, which usually walked
away with all the colour advertising throughout the 1980s.
The big difference between then and now is the respect that
language publications have gained. As late as the early 1980s,
Indian language magazines or newspapers did not get colour ads.
This was because media planners dismissed the purchasing pow-
er of the people who read these publications.51 Though English
continues to command premium ad rates, language publications
carry far more weight than they ever have.
One big similarity between then and now of course remains:
dailies were and still are the most powerful vehicles to advertise
in. That, maintains Purohit, remains unchanged. ‘If I was to do a
four-metro plan, dailies are still more cost efficient and if I want
a geography-specific impact then dailies is the best way to go,’
she says.
Earlier, most print buying was about scheduling and anybody
with a head for numbers would become a media planner. The
important task was not deciding what brands to buy—that was
evident from the ABC numbers. It was eliminating the duplica-
tion of readership. If a planner considered TOI and Hindustan
Times in Delhi he had to eliminate any duplication of readership
before judging the plan for reach or effectiveness. Around 1989,
IMRB introduced the software called PEM that helped do the
‘duplication tables’ faster.
The biggest change in the buying and selling function in the
last few years has been consolidation of media buying. It started
somewhere in the mid-1990s. It has completely changed how all
media, including print, is bought and sold. Currently, more than
60 per cent of all organised media buying is done by about half a

dozen media agencies.
The Key Measures

These are:
Circulation
This variable is measured by the Audit Bureau of Circulations (ABC).
It was set up in 1948 and is made up of advertisers, advertising agen-
cies and publishing companies. The ABC certifies audited NET
PAID circulation figures of publications enrolled with it for continu-
ous and definite six-monthly audit periods. It then supplies copies of
the ABC Certificates issued for such publications to each member.
Any free distribution and bulk sales are also shown separately on the
certificates. It certifies circulation based on the publisher’s records
on copies shipped, newsprint purchased, machine rooms, and even
carries out surprise checks on the printing facilities at times.52
Readership
This refers to the number of readers—as opposed to the number
of buyers for a magazine or newspaper. It is also defined as a mul-
tiple of circulation. For example, the circulation to readership ra-
tio in English is 1:1.5 or 2, whereas in Hindi and other languages
it is 1:4 or more.
In 1974 the first NRS (National Readership Survey) was initi-
ated using an urban sample size of 50,000. It was a simple report
by ORG–MARG that used monthly household income to deter-
mine purchasing power and looked at cinema-going and reading
habits. There was hardly any TV, since Doordarshan was the only
TV channel. In press, a handful of companies owned the brands
with the largest readerships—ABP, The Express Group or BCCL.
‘We never thought we would be doing it continuously,’ remem-
bers Katy Merchant.53
The second NRS was done jointly by IMRB and ORG. Even then,
‘since the clientele was small it could not evolve into anything more
than a readership-demographic study,’ says Merchant. By the third
Print 35
NRS in 1981, the research became ambitious. Products were linked

to reading habits and demographic profiles. If you read The Hindu
and earned `1,200 a month, the research would also show whether
or not you were a user of, say, Horlicks. That helped advertisers
focus their message. By 1984, NRS covered all cities.
This was long before computers became common, so there was
no software to run it all. Doing a large-scale survey such as the
NRS—to collect the data, tabulate and analyse it—took years. It
was only in 1991, remembers Merchant, that NRS started using
software to sift through the numbers.
The fundamentals of the survey remain the same—media ex-
posure and their linkages to product consumption. Readership is
measured using the masthead method. Respondents are shown
a black and white reproduction of the mastheads of newspapers
and magazines. For a daily like the TOI, the estimated number of
readers is equal to the number that has looked at any issue of that
daily ‘yesterday’. Similarly, the time interval for a weekly publica-
tion is in the ‘last seven days,’ the last 15 days for a fortnightly and
so on. This is called the ‘recent reading method’. In NRS 2001, the
estimation of ‘average issue readership’ for both urban and rural
India is based on this. The average issue readership also segregates
readers into heavy, medium and light readers. Heavy readers are
people who read for more than 10 hours a week, medium readers
give it between three to 10 hours while readers who give it less
than three hours a week are rated ‘light’.
To counter the NRS, which was supported by large newspaper
groups some media users got together to create the Media Re-
search Users Council (MRUC) in 1994.54 The idea was to offer
members a readership and market study to rival the NRS. The
first IRS was out in 1995. The next one came after a gap of a year.
From 1997, it was released biannually before becoming a quar-
terly study in 2010. It is a continuous readership study with a
sample size of over 256,000. The data is collected and released
twice a year to mitigate any seasonal biases. In the last few years,
IRS has added the angle of Household Premiumness Index (HPI)
to help marketers overcome the problems with the typical socio-
economic classification or SEC as it is popularly known.55
Many media research users and advertisers used both the IRS
and NRS. However, in 2006, the NRS was suspended following
anomalies in data. In 2009, the Media Research Users Council
(MRUC), which owns the IRS, and the Audit Bureau of Circu-
lations (ABC) which tabulates circulation data, came together
to pool their resources. The result was the Readership Studies
Council of India (RSCI) which was set up in October 2011. It
has been mandated to bring out the IRS. For more on what the
changes in the IRS could be please see Caselet 1c.
Reach
This is measured in circulation and readership numbers. It could
also be calculated as a percentage of the population penetrated
in a certain target group. It is not only the number of readers,
but also the proportion of readers of, say India Today, which fall
within the target audience for say a Santro. ‘If I look at SEC A, the
number of readers is highest for India Today and Business Today
and the least for India Today Plus. Then I look at how many of
my target group are readers of India Today Plus and India Today
and the numbers could be 5 per cent and 50 per cent. So, not
only is India Today high on the overall readership but a large
proportion on my target audience is reading it,’ explains Arpita
Menon, a former media buyer.56 Establishing a more precise
connect between reach and purchasing power is what IRS’ HPI
aims to do.
Cost per Thousand

This refers to the cost of reaching a thousand people through
a particular newspaper or magazine. These days, planners
go a step ahead and look at the average cost per issue versus
the readership. Unlike TV, where monitoring takes place on
a day-to-day, hour-to-hour basis, numbers for print flow in
every three months from the IRS and six months from ABC.
Therefore, ‘once you know what works, it holds’, says Menon.
If there is a rate hike, only the cost per thousand has to be
calculated again.
However, with multiple editions and publishing companies
offering a variety of rates for buying space in different editions,
planning has got slightly complicated. Most planners find TOI’s
basket perplexing. That’s because the company offers markets
Print 37
where it is strong (Mumbai) with ones where it is weak (Kolkata)

and it does this across brands (TOI, Economic Times), editions
and products (magazines and newspapers). That makes calculat-
ing the actual cost paid per column centimetre in a BCCL publi-
cation particularly difficult.
CPT or CPM as it is now called is becoming an important tool
for comparison between media. In the US almost three-fourths
of advertising clients pay on the basis of CPM.57
Integrated Reach
As newspapers experiment with the Internet and mobile,
they try to measure the total audience they offer across media
forms. In 2007, The (American) Audit Bureau of Circulations,
Scarborough Research and NAA launched the Audience-FAX
initiative to measure total reach. It incorporates circulation,
readership and online measures into ABC’s reports. Some
newspapers, which are part of this initiative, have even renamed
their circulation departments as ‘audience development and
membership departments’. It is the addition of online reach
(drawing on Nielsen/Net Ratings) that is most important.
Even as print versions of newspapers lose audience, their
online versions have more than made up.58 The combination
of online statistics and circulation information aids advertisers
to compare reach with other forms of media, such as TV and
radio.
The Regulations59
The History
If the television-broadcasting industry had almost no regulation
to begin with, the press has historically been over-regulated.
Till 1798, there was no law on the press except for some pre-
censorship or cases under libel laws and in extreme cases,
deportation. Sometimes, people aggrieved by what the press
had written simply had them beaten up. Acharya Dr Durga Das
Basu (1996) documents the earliest attempt to suppress the press,
which was in 1798 by the then Governor General, the Marquis

of Wellesley. He was angry with The Asiatic Mirror for revealing
the details of the strength of the East India Company and Tipu
Sultan’s forces.
The first set of regulations were issued in May 1799 by
Governor General Wellesley to control the ‘conduct of the whole
tribe of editors’, breach of which was punishable with deportation.
It required newspapers under the ‘pain of penalty’ to print the
names of the printer, publisher and editor of the newspaper (this
continues to date). All material published had to be given for
pre-censorship to the Government of India (not necessary now).
Many other ordinances and regulations followed in 1823, 1835
(Metcalfe’s Act), 1857, 1860, and so on. The important ones are:
The Indian Penal Code, 1860

While it did not deal with the press specifically, portions of
it laid down offences that could relate to any writer, editor or
publisher: for example, with regard to obscenity. It also intro-
duced the ‘law of sedition’ (that is, prohibition of incitement or
attempts to incite disaffection against the Government).60 This
comprehensive Code, which is still in force and governs crimi-
nal law in India, introduced, for the first time, offences for defa-
mation and obscenity.
The Press and Registration of Books Act, 1867

The idea was not so much to control as to regulate printing press-
es and newspapers by a process of registration and also to pre-
serve copies of books and other matters printed in India. This
Act still exists.
The Vernacular Press Act, 1878

It was aimed at punishing Indian language newspapers writing
‘seditious’ articles. It empowered the government for the first
time to issue search warrants and enter the premises of any press
without court orders. It was repealed in 1881. In a fantastic move,
Print 39
Amrita Bazaar Patrika, a Bengali newspaper set up in 1868, con-

verted overnight into an English daily in 1878 to escape being
punished under the Vernacular Press Act.
Just like the Vernacular Press Act, 1878, various other acts that
were directed against ‘seditious’ writing came into being at various
points of time in the 19th and 20th centuries. These were: the
Official Secrets Act, 1889; the Newspapers (Incitement to Offences)
Act, 1908; the Indian Press Act, 1910; the Indian Press (Emergency
Powers) Act, 1931. Some involved payment of a security deposit,
which left most publishers too poor to print. Others involved a
forfeiture of the press. Many of these were later repealed.
It was decades later, during the Emergency of 1975–77, that
some of the grim excesses against the print media were com-
mitted. The government introduced the Prevention of Publica-
tion of Objectionable Matter Ordinance, which was a rehash of
a 1951 Act that had been repealed because of its extreme powers
for censorship. The Janata government of 1977 repealed many of
the retrograde steps taken in 1975. Even without legislation the
government used indirect ways such as newsprint quotas to keep
the press in line.
The Freedom of the Press

After Independence, the Government of India appointed a Press
Laws Enquiry Committee to review the press laws of India. It
suggested various amendments and repealed several acts. What
was finally decided was not to spell out a separate clause for free-
dom of the press, but rather that it remained as part of the right
to freedom of speech and expression which every citizen of the
country was guaranteed through Article 19(1)(a) of the Consti-
tution. The only exceptions to the right guaranteed under Article
19(1)(a) were contained in Article 19(2) which allowed imposi-
tion of ‘reasonable restrictions’ on the exercise of the rights con-
ferred by the Constitution in the interests of ‘the sovereignty and
integrity of India, the security of the State, friendly relations with
foreign States, public order, decency or morality, or in relation to
contempt of Court, defamation or incitement to an offence.’ These
constitutional guarantees form the bedrock of the right which
the press enjoys in India.
This right has been put under judicial scrutiny on a number of

occasions. The Supreme Court of India has implicitly read into
this freedom of the press a number of other concomitant rights
such as:61
1. The right to circulate and disseminate information and

opinion. Any restrictive law which directly affects the cir-
culation of a newspaper has been held to amount to a vio-
lation of the freedom of speech, by the Supreme Court.62
2. The right to decide its size, volume and price and the ex-
tent of advertising it can carry.63 Earlier in 1956 the gov-
ernment had used this as a means of controlling the press
through the Newspaper (Price and Page) Act of 1956,
which was annulled by the Supreme Court in 1962. The
Act laid down that a newspaper could not increase the
number of pages it gave without increasing the price pro-
portionately. It was an illogical piece of legislation that
claimed to protect small newspapers.
3. The right to criticise the government has been held as part
and parcel of the freedom of speech and any act of the
government to curtail this freedom [for example, through
pre-censorship regulations], except for serious danger to
the foundations of the State, has been quashed by the
Supreme Court.64
4. The right to interview and the right to protect its sources
of information. The Supreme Court has held that the press
has a limited right in this regard and the willing consent
of the person sought to be interviewed is essential.65 There
is, however, no particular provision which protects the
Press from being compelled to disclose its sources, except
for a generally recognised principle.
5. The right to advertise has been read into the freedom of
speech by the Supreme Court interpreting it as the right
of ‘commercial speech’.66 The Supreme Court observed that
‘for a democratic press, the advertising subsidy is crucial.’
6. The Press also enjoys the right to its intellectual property
that is its content, under the Law of Copyright. This right
is available under the Indian Copyright Act 1957 and it
subsists in the physical expression of the thought and
Print 41
not in merely an idea. The proprietor of the newspapers,

magazines or periodicals are the principal owners of the
copyright since the content published, albeit authored by
different reporters/journalists, is commissioned under a
contract of service. For articles that have external authors,
the copyright has to be assigned to the newspaper by the
author. The process of ‘syndication’ by the Press involves
essentially a contract of assignment for limited use by the
periodical or newspaper of content like cartoons, puzzles,
photographs, etc.
The Restrictions on Press

These include:
Right to Privacy
There is a duty toward respecting an individual’s right to privacy.
Although there is no specifically defined right toward privacy in
the Constitution of India, the Supreme Court has carved out a
right under Article 21 [Right to Life and Liberty]. In R. Rajagopal
vs. State of Tamil Nadu (1994) 6 SCC 632, the Supreme Court held
that there was a right to be let alone and no person has the right
to publish anything relating to personal matters without the con-
sent of the person concerned except where the matter is of public
record or if the conduct relates to a discharge of official duties
by a public official. A number of other legislations also impose
restrictions on the press, in the interests of privacy. For exam-
ple, The Children’s Act, 1860, prohibits publication of names and
other particulars of children involved in proceedings; The Hindu
Marriage Act, 1955, restricts publication of reports concerning
proceedings of matrimonial disputes; The Copyright Act, 1957,
puts a restriction on unauthorised publication of certain docu-
ments, photographs, etc.; The Code of Criminal Procedure, 1973,
puts a restriction on publication of reports concerning legal pro-
ceedings like rape trials; The Indecent Representation of Women
(Prohibition) Act, 1986, prohibits ads and publications contain-
ing indecent representation of women.
Foreign Investment
In 1955, the central cabinet passed a resolution that debarred
foreign companies from launching Indian editions of their print
brands and from investing in Indian print companies. While it was
never converted into a law, it has been treated like one for all the
decades that followed. Technically, nothing stopped a foreign mag-
azine from selling in India or launching an Indian edition or invest-
ing in a publishing company in India. However, the 1955 cabinet
resolution, which never became a law or an ordinance, remained
the defining word on this issue for decades. During the 1990s, vari-
ous companies that wanted to launch foreign print brands in India
or bring in a foreign investor were prevented from doing so.
Finally, in June 2002, the cabinet passed a resolution allowing
26 per cent FDI in print. This was amended in 2005 to allow FII
and further amendments were made in March 2006.
The salient points about the foreign investment policy in Indian
print are:
1. FDI up to 100 per cent is permitted in publishing/print-

ing scientific and technical magazines, periodicals and
journals in India.
2. FDI up to 26 per cent is allowed for publishing newspapers
and periodicals dealing in news and current affairs subject
to guidelines issued by the Ministry of Information and
Broadcasting. This 26 per cent includes investments by
NRIs, FII, Persons of Indian Origin (PIO), subject to
these entities having sound credentials and international
standing.
3. The 26 per cent FDI is allowed only in cases where the
resultant entity is a company registered under the Indian
Companies Act, 1956 and the 26 per cent forms part of
the paid-up equity. Further, the equity held by the largest
Indian shareholder, should be at least 51 per cent of the
paid-up equity, excluding the equity held by public sector
banks and public financial Institutions.
4. Half or 50 per cent of the 26 per cent FDI shall be by fresh
equity, while 50 per cent may be inducted through trans-
fer of existing equity.
5. The permission for the 26 per cent FDI is conditional
on at least three-fourths of directors on the board of the
Print 43
resultant entity and all key executives and editorial staff

being resident Indians.
6. An Indian company is allowed to publish a facsimile
edition of a foreign newspaper provided at least three-
fourths of the directors on the board of the resultant en-
tity and all key executives and editorial staff are resident
Indians. The facsimile edition should not carry any ad
aimed at Indian readers in any form and also any locally
generated or India specific content, which is not simul-
taneously published in the original edition of the foreign
newspaper. The facsimile editions have to obtain prior
permission from Ministryof Information and Broadcast-
ing and the title has to be registered with RNI.
7. As regards ‘syndication arrangements’, including photo-
graphs, cartoons, crossword puzzles, articles and features
from foreign publications, the automatic approval route
is allowed subject to the restriction that the total mate-
rial so procured and actually printed in an issue of the
Indian publication does not exceed 20 per cent of the total
printed area of that issue and does not include full copy
of the editorial page or the front page of the foreign pub-
lication. The mast head of the foreign publication cannot
be utilised and the credit has to be given as a prominent
byline in the Indian publication.
In addition to this the Consolidated Foreign Investment

Policy (Circular 1 of 2012), which came into effect on April 10,
2012, consolidates and supersedes all other policy instruments
concerned with foreign investment. This consolidated policy
permits foreign investment of up to 26 per cent (including
investments by NRIs, FII and PIOs) in Indian editions of foreign
magazines67, subject to guidelines issued in this regard by the
Ministry of Information and Broadcasting. A magazine, as per
the consolidated policy, is defined as a periodical publication that
is published or brought out on a non-daily basis and contains
public news or comments on public news68.
These guidelines issued by the Ministry of Information and
Broadcasting indicatively require that69
1. the entity publishing the Indian edition must be an Indian

company incorporated under the Companies Act, 1956
2. the title of the magazine must be registered with the RNI

3. the publisher of the foreign magazine must be of sound
credentials
4. at least three-fourths of the directors on the Board of
Directors of the Indian company, and all key executives
and editorial staff (except such foreign residents whose
appointment has been approved by the Ministry of Infor-
mation and Broadcasting) must be resident Indians
5. the foreign magazine should have been published con-
tinuously for at least five years and have a circulation of
at least 10,000 paid copies in the last financial year in the
country of origin.
Other Restrictions
A number of legislations impose certain other restrictions on the
Press. Following are some of these restrictions:
1. The Press and Registration of Books Act, 1876, mandates

that all publications be registered in India. An RNI has
been created under the Act.70 The provisions also require
every book or newspaper in India to carry the names of
the printer or publisher, place of printing and of the editor
in case of a newspaper.
2. The Indian Post Office Act, 1898, makes the transmission of
obscene matter which is sent by post, a punishable offence.
3. The Customs Act, 1962, allows the government to pro-
hibit the importation of matter which is likely to offend
standards of decency or morality.
4. The Official Secrets Act, 1923, prohibits activities which
may be harmful to the sovereignty and integrity of India
and the security of the state.
5. The Emblems and Names (Prevention of Improper Use)
Act, 1950, restricts use of certain emblems and names like
the national flag or seal of the government.
6. The Prevention of Insults to National Honour Act, 1971,
makes any act amounting to an insult to national honour,
an offence.
Print 45
7. The Delivery of Books and Newspapers (Public Library)

Act, 1954, mandates that one copy of every newspaper
published would be delivered to specified public libraries.
8. The Drugs and Magic Remedies (Objectionable Ad-
vertisements) Act, 1954, forbids publication of ads for
drugs used for certain purposes like sexual disorders,
menstrual issues or drugs making false claims of their
efficacy.
9. The Working Journalists and other Newspaper Employ-
ees (Conditions of Service and Miscellaneous Provi-
sions) Act, 1955, and the Working Journalists (Fixation
of Rates of Wages) Act, 1958, prescribe the minimum
standards of working conditions for journalists and
newspaper employees.
10. The Young Persons (Harmful Publications) Act, 1956,
makes it an offence to print/publish any publication
which would lead to the corruption of anyone under the
age of 20 years.
11. The Atomic Energy Act, 1962, prohibits disclosure on
atomic plants, their purposes and methods of operation.
12. The Civil Defence Act, 1968, empowers the government
to prohibit the printing/publication of any newspaper,
etc., which may contain matters prejudicial to matters of
the defence of the country.
13. The Prize Competitions Act, 1955, and the Prize Chits
and Money Circulations Schemes (Banning) Act, 1978,
makes publication of matters concerning unauthorised
lotteries an offence.
14. The National Security Act, 1980, allows the government
to detain any person to prevent him from acting in a
manner prejudicial to the defence of India or to the secu-
rity of the state.
15. The Representation of Peoples Act, 1951, forbids publica-
tion of any false statement of fact in relation to the personal
character or conduct of an election candidate, besides other
election related restrictions.
16. The Police (Incitement to Disaffection) Act, 1922, prohib-
its any act intended to cause disaffection among members
of a police force.
17. The Unlawful Activities (Prevention) Act, 1967, makes it

an offence to do any act intended to bring about secession
of any part of India.
18. The Protection of Civil Rights Act, 1955, prohibits mak-
ing of comments that would encourage the practice of
‘untouchability’.
19. The press is subject to the long recognised right of an indi-
vidual not to be defamed or disparaged and to protect his
reputation and integrity. Defamation in India gives right of a
civil remedy for damages as also is a criminal offence under
the Indian Penal Code, 1860. There is no statutory immunity
for the managing editor, resident editor or the chief editor
against prosecution for the publication in a newspaper over
which these persons exercise control.71 The following are
recognised as defences to an action for defamation: justifica-
tion of truth of the statements, fair comment on matters of
public interest, privilege (absolute or qualified) and consent.
20. The Press Council of India promulgated guidelines to ac-
commodate concerns relating to the reporting of children
and of persons affected by HIV/AIDS in the media. The
guidelines in relation to the reporting of persons affected
by HIV/AIDS were amended in 2008 and require media
personnel (in print, visual and electronic media) to en-
sure objective, fair, accurate and balanced reporting and
cautions against the promotion of myths or unsubstanti-
ated traditional remedies in relation to the transmission
and treatment of HIV/AIDS. 72
21. With respect to children, the Press Council of India’s has
updated the Norm on Journalistic Conduct in 2010 and
requires that while reporting on children, their identity
and privacy should be respected; in particular, in cases
where children are subjected to sexual assault or are the
offspring of sexual abuse, forcible marriage or illicit sexu-
al union.73
The press, its interests and issues are managed in India
through the Press Council formed under the Press Council
Act, 1978, which has the task of preserving the freedom
of the press as well as improving its standards and be a
watchdog. Rules of procedure have been formulated for
handling complaints from the public regarding the Press.74
Print 47
The Valuation Norms75

The Key Variables
Till about 2003, only a handful of publishers had raised money

from the market. Also, it should be noted that the industry is ex-
tremely closed about numbers. So, any analysis on how valuations
worked was extremely difficult. There were just a few listed print
companies—Sandesh, Infomedia and Mid-Day Multimedia. It was
after foreign investment was allowed in 2002, that some private
equity deals and later initial public offers of print companies took
place. However, post 2005, several larger print companies listed—
Deccan Chronicle Holdings, HT Media and Jagran Prakashan.
There is now a clear sense of how valuations work in this business.
The important variables are:
Position, Scale and Market Share

As mentioned earlier, if a company is the leader or number two in
the segments it operates in, it will get a disproportionately large
share of revenues and profits. The TOI is a good example of this.
Its leadership position in the English newspaper spaces means
a disproportionately high share of revenues and profits. Its abil-
ity to cross-sell other publications (for example, The Economic
Times or Navbharat Times), to cross-sell other media (TV, inter-
net, radio) or do events (Filmfare Awards) is much better than
smaller rivals.
BtoB or BtoC
A BtoC or business-to-consumer magazine or newspaper is
targeted at a larger, more general mass of people, say Outlook
or India Today. A BtoB or business-to-business publication is
targeted only at people within a certain trade or business. BtoB
is usually a more profitable bet. However, BtoC makes up with
a higher topline, so the quantum of profits is higher even if the
percentage margins are lower than BtoB. Also it is the more stable
part of the business, says Amol Dhariya, director, IDFC Capital.
He reckons that since BtoB is used more for below-the-line

activity, it becomes the first thing to be cut in a downturn.
Return on Capital Employed or ROCE

Till there wasn’t much activity in print, the ROCE ratio was a
good way to measure a company’s efficiency, especially in M&A
deals. Typically, print is a capital-intensive, long-gestation busi-
ness. Most companies in the business have long since depreciated
plants and assets. Therefore, ROCE is a good indicator of how
much they have managed to get out of the capital they had put
into the business. Companies operating at optimum efficiencies
can get as much as 30–40 per cent. However, as the need to grow
and expand within print and to other media increases, ROCE
doesn’t work as well. Dhariya reckons that printing has now be-
come a variable expense, since it can be outsourced. A newspaper
company doesn’t invest in a printing press every time it expands.
‘ROCE is important, but one can’t correlate it strongly to valua-
tions in the media business’, says he.
Market Dynamism
If the market is fragmented and in a state of high growth, the
possibilities for both organic growth and M&As are very high.
This is when free cash flow, management depth and the ability to
leverage are crucial. Then, EBITDA76 is a measure for valuation
and market growth influences valuation.
Synergy
This, says Dhariya, applies to all media. ‘You may not be the mar-
ket leader but your ability to drive profits through owning mul-
tiple media (like TOI) or through a vertical presence in the value
chain (a television broadcast company owning a DTH and cable
firm), make up for the lack of any leadership in any individual
region’, says Dhariya.
Print 49
Table 1.1a The Top Advertisers in Print—Product Categories
Top 10 Super Categories in 2010 in Print

Rank Super Categories % Share
1 Services 12
2 Education 12
3 Banking/Finance/Investment 11
4 Auto 7
5 Retail 5
6 Personal Accessories 4
7 Durables 4
8 Personal Healthcare 3
9 Textiles/Clothing 2
10 Corporate/Brand Image 2
1 Services 14
2 Education 11
4 Auto 8
5 Retail 5
7 Durables 4
10 Food & Beverages 2
1 Services 14
2 Education 11
3 Auto 9
(Table 1.1a Contd.)

(Table 1.1a Contd.)

6 Retail 5
7 Durables 4
Source : Adex India, a division of TAM Media Research.

Note: The ranking is based on volumes of advertising. Volumes being measured
in column centimetres.
Table 1.1b The Top Advertisers in Print—The Companies
Top 10 Advertisers in 2010 in Print

Rank Advertisers % Share
1 Naaptol.com 1
2 Tata Motors Ltd 1
3 Pantaloons Retail India Ltd 1
4 Maruti Udyog Ltd 1
5 Lg Electronics India Ltd 1
6 Gitanjali Gems Ltd 1
7 Dell Computer Corporation 1
8 SBI (State Bank of India) 0.5
9 General Motors India Ltd 0.5
10 Videocon Industries Ltd 0.4
1 Tata Motors Ltd 2
2 Naaptol.com 1
4 Tvc Skyshop.com Ltd 1
(Table 1.1b Contd.)

Print 51
(Table 1.1b Contd.)

5 General Motors India Ltd 1
6 Samsung India Electronics Ltd 1
9 Mahindra & Mahindra 0
10 Videocon Industries Ltd 0
2 Naaptol.com 2
3 Tata Motors Ltd 1
5 SBI (State Bank of India) 1
6 Hero Motocorp Ltd 1
8 Hindustan Lever Ltd 0
9 Sbs Biotech Group Of Company 0
10 Bajaj Auto Ltd 0
Source: Adex India, a division of TAM Media Research.

in column centimetres.
Table 1.2 The Print Industry in India—The Big Picture
Revenues (` bn) % of % of ad
Language 2011 2012 readership revenues
English (Total) 83 86 10 39
Advertising 57 59
Circulation 26 27
Hindi (Total) 62 69 36 30
Advertising 41 45
Circulation 22 24
Other Indian languages 63 69 54 31
(Total)
Advertising 42 46
Circulation 21 23
Total advertising 139 150
revenues
Total circulation 69 74
revenues
Total print industry 209 224
revenues
Source: FICCI-KPMG Report 2013, IRS and Hansa Research.

Note: % readership refers to average issue readership in IRS's round three in 2012.
Caselet 1a The Digital Devastation—The American Story*
‘We will stop printing the New York Times sometime in the fu-
ture, date TBD’, publisher and chairman Arthur Sulzberger,
Jr, said to attendees of the International Newsroom Summit.
For a glimpse into the future of newspapers, there is no mar-
ket like the US. It is a Petri dish of what the Internet could
do and what newspaper companies should or should not be
doing.
Let’s look at the facts first. The newspaper business in the
US has shrunk even as operating margins have fallen from
(Caselet Contd.)
Print 53
(Caselet Contd.)
25 per cent to 15 per cent. Total advertising revenues con-

tinue to fall and have more than halved from $49.3 billion
in 2006 to $24 billion in 2011. Online revenues are on a rise
though this doesn’t compensate for the loss from the print
revenues. In fact, in 2012, in media companies, the ratio of
print to online revenues was 10:1 according to a research
in the State of the News media report. Paid circulation is
witnessing a steady drop from 62.3 million in 1990 to 55.8
million in 2000 to 43.4 million in 2010. The time spent on
the Internet reading newspapers has risen from an average
of 41 minutes in 2006 to 66 minutes per person per month in
2011, indicating that readers are moving online.
Meanwhile, online advertising continues to grow year on
year. Internet ad spend increased by 22 per cent and mobile
advertising by 149 per cent in the US in 2011, according to
research conducted by PricewaterhouseCoopers for the In-
teractive Advertising Bureau. There is money to be made in
online advertising; it is just that the newspapers are still not
able to tap into it.
The American newspaper industry is undergoing a
period of massive upheaval and transformation. There
is a marked change in the way audiences consume news.
New York Times’ Nick Krystof once said in an interview
that, ‘We’re moving from a format where we “proclaimed
the news” to the world on a fixed schedule to one where
we converse with the world on a 24/7 basis.’77 This greatly
impacts the landscape of journalism and the newspaper
businesses. With a lot of information available on the
Internet for free from myriad sources, and the financial
recession in 2008, the newspapers have a perfect recipe for
losing their audiences.
Newspaper companies are bravely responding to this
change by coming up with various strategies to increase their
revenues. These can be broadly divided into three areas:
One: Investment in technology and social media: The
Knight foundation for journalism has invested around
(Caselet Contd.)
(Caselet Contd.)
US$150 million in technology-related projects to pave a way

for the future of journalism. Several journalism schools have
initiated interdisciplinary programs that involve students of
computer science, journalism and design to develop soft-
ware and technology conducive to digital journalism. One
such project called ‘Newsfeed’, by students of Northwestern
University, is a website built for iPhones that offers news
packages for a reader pressed for time. The website has ar-
ticles tagged as ‘appetizers’ (news briefs in five minutes),
‘entrée’ (consisting of four full-length stories) and desserts
(consisting of two funny, light-hearted pieces.). Compa-
nies have begun to acknowledge the importance of having a
comprehensive and well–thought-out social media strategy
and investing in it. Social media channels help in improving
promotion, interactivity with their brand and widespread
dissemination of information when consumers comment,
rate articles, post links, share articles from these newspapers
directing more audiences to their websites.
Two: Diversification into media and non-media busi-
nesses beyond news delivery and content creation. Accord-
ing to research by Capstone for World Newsmedia Research
Group (WNRG), companies are using their brand name
to create product line extensions. The New Yorker and the
German newspaper Frankfurter Allgemeine Zeitung offer ar-
chives for a fee. Some of them offer specialised in-depth re-
ports in certain areas like finance or law for a fee. A Chilean
newspaper called El Mercurio has launched a second website
where all articles are behind pay walls, and offers analysis
and articles in only a few areas. Businesses are also using
their brand name to sell goods through their store. For ex-
ample, New York Times has a store that sells everything from
mugs to other collectibles. In their food section, they sell
wineries from locations other than the USA. The Guardian,
on the other hand, sells reviewed books, while Süddeutsche
Zeitung, a German newspaper recommends and sells books
and DVDs. Many of the newspapers are also diversifying
(Caselet Contd.)
Print 55
(Caselet Contd.)
into other types of businesses like creating a local social

network that the local advertisers can use for getting to a
specific target pool or conducting workshops including edit-
ing classes and medical conventions.
Three: Adopting different pay wall strategies. While com-
panies don’t have any qualms asking their audiences to pay
for content, the trouble is that with so much information
available online for free, consumers don’t want to pay for
it. In a US Senate hearing, Simon, an ex-Baltimore news-
paperman called content aggregators as ‘leechers’. He said,
‘.…Aggregating websites and bloggers contribute little more
than repetition, commentary and froth. Meanwhile, read-
ers acquire news from aggregators and abandon its point of
origin, namely the newspapers themselves. The parasite is
slowly killing the host.’
Newspapers have come up with different ways of making
the consumer pay for their content. The New York Times, for
example, lets you read a certain number of articles for free
and then asks you to pay if you want to read more or al-
lows you to only read articles which are directed through
online search or social media websites. The New York Times
also throws in a free digital subscription for all the print sub-
scribers, though the reverse is not true. Consumers have sev-
eral options to choose their digital subscription from. USA
Today or The Guardian provides all content for free, relying
solely on advertising. On the other hand, Wall Street Journal
expects consumers to pay for any specialised articles while
some generic news articles are for free. Companies like the
Times of London are completely behind a pay wall—if you
want to read anything from these websites, you have to pay.
It remains to be seen how these strategies will impact rev-
enues in the long term.
*Caselet researched and written by Sinduja Rangarajan, a
former qualitative researcher with TNS India and Colors. She
is currently studying journalism at University of Southern
California.
Caselet 1b The Rising Power of Hindi Newsapers§
Till 2005, English papers got 60 per cent of all the print me-
dia advertising in India. All the other Indian languages, in-
cluding Hindi, got the remaining 40 per cent. That ratio is
now reversed. ‘The potential, size and vibrancy of the market
is now getting reflected’, says Girish Agarwal, director, DB
Corporation (Dainik Bhaskar).
As middle-class families in small towns prosper, advertis-
ers want to reach out to them. While this has led to a boom
in all languages, Hindi happens to be the biggest of them.
The language, spoken by roughly 500 million Indians across
13 states and union territories, makes up a print ad market
of `75 billion growing at 10.8 per cent, way above the aver-
age 8.7 per cent that print as a medium is seeing78. All other
Indian languages put together get the same revenue as the
Hindi market. For any publishing company wanting to go
national, Hindi is critical. Of the `224 billion newspaper in-
dustry (2012), Hindi has a share of 31 per cent, up from 20
per cent only five years back in 2008.
The three listed publishers, Dainik Jagran, Dainik Bhaskar
and Hindustan, have been expanding rapidly. Ditto for the
unlisted ones such as Rajasthan Patrika and Amar Ujala,
which are defending their territories and getting into new
ones. Most are discovering that the fragmented Indian
newspaper business makes for a nightmarish M&A market.
There are more than 32,000 Hindi publications (a bulk of
them newspapers) in India. Most are irrelevant. Many of
the good brands, Amar Ujala, Rajasthan Patrika or Prabhat
Khabar, are not really interested in selling. Others such as
Nai Dunia, have already been snapped up (by Jagran in
2012).
Why are acquisitions and scale important? At almost 64
million readers, Hindi papers have over three times the audi-
ence that the English ones do. Yet the ad rates that an English
paper commands are about five times more than Hindi. This
is better than the 10–12 times it was just about seven years
(Caselet Contd.)
Print 57
(Caselet Contd.)
back because the ‘perception of advertisers about the Hindi

newspapers is very positive today’, points out Arvind Kalia,
national head of marketing, Patrika Group. Therefore, as
literacy increases and small towns continue to expand, ad-
ditional growth will come by improving rates vis-à-vis the
declining English newspaper market.
This will happen only for brands that can deliver the Hindi
market en bloc. For instance, even if Dainik Bhaskar doesn’t
lead in all the cities in Madhya Pradesh, as long as it is the lead-
er in the state, advertisers will take it in their plan. Ditto for
Hindustan, the leader in Bihar. But when it comes to a national
ad plan, a Dainik Bhaskar, which has more editions across the
Hindi belt than Hindustan which operates only in four states,
wins. That explains why everyone has rushed to expand.
When five really big brands do that, price cutting is inevi-
table. ‘The big trouble is they are entering into each other’s
market. As a result circulation revenues for Hindi print have
fallen from 25–30 per cent of sales to 20 per cent over the
last five years’, says Vikash Mantri, vice president, ICICI Se-
curities. Remember that traditional Indian language papers
have had healthy subscription revenues unlike the 10 per
cent of the total that English gets. So this drop in an annuity
income worries investors.
It did not matter till 2011 when advertising was grow-
ing at 10–12 per cent. But as overall ad growth slumps to
an estimated 7 per cent and less and newsprint costs rise
by 20 per cent, thanks to a depreciating rupee, margins are
being squeezed. There are two things that Hindi publishers
can do.
One, ramp up readership and circulation numbers in each
state through acquisitions or organic growth to get better ad
rates. Most are trying to do that very seriously. For example,
there was a skirmish between Jagran and Zee to acquire
Amar Ujala in 2012. At roughly 8.6 million in readership,
Amar Ujala leads in three states—Jammu & Kashmir,
Uttarakhand and Himachal Pradesh. Dainik Jagran, the
(Caselet Contd.)
(Caselet Contd.)
largest read Hindi daily, is present in 15 states. However, it is

only in Uttar Pradesh (UP) that it is a leader on readership.
Taking over Amar Ujala can give it leadership in five key
states, including Delhi. ‘The combination (of Amar Ujala
and Dainik Jagran) would ensure that rivals such as Dainik
Bhaskar and Hindustan are miles behind in the national
ranking’, says A. S. Raghunath, a media consultant. For
Zee, the paper has synergies with its Hindi television news
business and its English paper, DNA.
‘The only state for which Jagran can command its own
ad rates is UP. For all the other states it has to negotiate’,
says one media analyst. And in UP, Dainik Jagran faces HT
Media’s Hindustan. The paper is racing ahead of Dainik Jagran
in key towns such as Lucknow. ‘The AUPL acquisition (if it
happens) could help keep Hindustan in check’, says another
media consultant.
Two, stay put and consolidate. In the five years ending in
2012, Hindustan has doubled revenues and grown operat-
ing profits by 10 times by sticking to only four states—Bihar,
Jharkhand, UP, and Uttarakhand. Its presence in UP is now
more or less complete. It has no plans for expanding outside
of these states. ‘In a state that already has 3 or more players,
it is not easy for a new player to build a business with scale.
Also, it is very expensive’, says Amit Chopra, former CEO,
Hindustan Media Ventures. He points out that it could take
more than five years for a daily to achieve breakeven in a
new state.
Does any of this matter when the internet is taking away
large chunks of the audience? While that is true for the metro-
English speaking market, ‘in the Hindi belt newspapers are
the last word on anything’, says Chopra. The aspirational
value of newspapers and the fact that they have right of way
into homes, unlike the internet, makes them powerful me-
dia vehicles much like English papers were in a Mumbai or
Delhi in the nineties. Besides, Hindi papers reach barely 20
per cent of a market where literacy is about 65 per cent. So
the headroom for growth is significant.
§ Excerpted from Business Standard, December 13, 2012.
Print 59
Caselet 1c The Indian Readership Survey and Why it is

Changing±
The IRS is the currency used to buy and sell advertising in the
`224 billion Indian print industry (advertising plus pay). It
measures readership, viewership et al. of newspapers, maga-
zines, TV, radio, internet and cinema in India every quarter.
It also offers a demographic map of Indian consumers and
a look at their consumption patterns across categories like
consumer durables, cars, consumer products and so on.
In 2009, the Media Research Users Council (MRUC),
which owns the IRS, and the Audit Bureau of Circulations
(ABC), which tabulates circulation data, came together to
pool their resources. The result was the Readership Studies
Council of India (RSCI), which was set up in October 2011.
It has been mandated to bring out a new improved IRS.
Paritosh Joshi, principal at Provocateur Advisory, heads the
technical committee of the RSCI. He reckons that the prob-
lems with IRS stem from sampling and non-sampling issues.
Take the non-sampling ones first. It takes one and a half hour
to administer one questionnaire. The quality of the response,
therefore, is suspect because by the end of 30–45 minutes, most
respondents tend to fade out. ‘Internationally, it is acceptable
to do data fusion instead of trying to capture every answer in
one sitting’, says Joshi. The idea is to do a suite of studies each
with one set of questions and then fuse the data. The data col-
lection could happen from different samples. ‘This way you get
a lot of data without increasing sample size and overloading the
respondent’, says Lynn De Souza, chairperson, RSCI.
Then there is the suspicion that IRS can be tampered with.
Theoretically, the field researcher could be influenced to
tamper with the responses. So, the technical committee has
recommended the use of data capture technology instead of
pen and paper. ‘You could geo tag every interview. The mo-
ment an interview is over in any city or town, you can lock
it down. Once it is sealed and encrypted, nothing in it can
(Caselet Contd.)
(Caselet Contd.)
be changed by anybody’, says Joshi. Much of this reduces the

possibility of tampering.
The technical committee, therefore, abandoned the no-
tion of incremental change and decided to rebuild IRS de
novo. The major changes it has recommended and that are
being implemented are:
1. Pen and Paper interviews will be replaced in toto by

CAPI (Computer-Assisted Personal Interviewing).
Double Screen CAPI, the technology of choice has nev-
er been deployed on this scale anywhere in the world.
2. ‘Aided’ questions, like those for publication readership
recency and frequency, will be randomised by the CAPI
system, thereby eliminating presentation order bias.
3. Interview durations will be capped at less than 40
minutes. The current IRS interview goes well beyond
an hour.
4. Data Fusion and Ascription will enable comprehen-
siveness by extracting greater efficiency from every
interview.
5. Highest emphasis has been placed on security and
integrity. Geo-tagging, voice recording and live
interviewer route tracking will deter would-be
fraudsters.
6. The IRS technical committee morph from being an
administrative overseer of the study to an ideas labo-
ratory that will constantly generate evolutionary and
revolutionary initiatives to drive ahead the study’s
agenda.
±The first part is excerpted from A New Readership Survey
in the Works, Business Standard, May 18, 2012 and the sec-
ond part of the main changes in IRS written by Paritosh Joshi,
principal, Provocateur Advisory.
Print 61
Notes
1. Throughout this chapter publishing or print industry refers to the Indian
newspaper and magazine industry. This does not include books.
2. World Press Trends 2008.
3. Compounded annual Growth Rate.
4. In 2005 when FII or foreign institutional money was allowed is when the
investment really started flowing in.
5. Table 0.4 has a total of all investments in media over 2010–2012.
6. Disclosure: I write a fortnightly column for Mid-Day.
7. For the most lucid analysis on the impact of the net do read ‘The State
of the News Media, 2013’ (thestateofthenewsmedia.org) available online
for free. A lot of my understanding of what’s happening in the US market
comes from it.
8. The Future of Print Media, The Capstone Report 2011.
9. After BCCL Guha was with the Zee Group for a few years before he set up
his own firm Culture Company in 2008.
10. Circulation refers to, literally, the number of copies a newspaper or maga-
zine circulates. A bulk of these are copies bought and paid for by readers. It
does not include free copies. Circulation revenue refers to the money that
newspaper companies collect from the cover price after deducting trade
margins.
11. Sinduja Rangarajan worked as a qualitative researcher with TNS India and
in the research team of Colors, at Viacom18 Media. She is currently study-
ing journalism at University of Southern California.
12. See section on metrics for more details on what the currency is and how it
operates.
13. For more on what publishers do, do read ‘Time to grow up, Indian media,’
in Mint, Sep 22, 2008 by Pramath Raj Sinha. Sinha is currently CEO of
Nine Dot Nine Mediaworx and was earlier the head of ABP, the publisher
of The Telegraph and Businessworld, among other brands.
14. Most of what I have written in this portion has appeared in my columns
or other pieces of work that I have done over the last few years. So it may
sound familiar to people who have read me on this earlier.
15. http://presscouncil.nic.in/HOME.HTM Go to the Sub-Committee report
link under the sub-head ‘Paid News’ on the website to read the report.
16. Initial Public offer or a company’s first listing of shares on the stock market.
17. Net users refers to surfers. This is usually a multiple of the number of
subscribers. In India the multiple is assumed to be five people per net
subscription, therefore 127 million users (based on a 25.33 million
subscriber number). Source: The Telecom Regulatory Authority of India
or TRAI website.
18. These are processes in the production of newspapers and magazine—
pre-press means the process before production, press literally means the
production and post press means post-production.
19. Eight Trends to Track in 2008, From measuring total audience to hyperlo-
cal news coverage, newspapers are auditioning new business practices in
2008, PRESSTIME staff writers, Newspaper Association of America.
20. Log on to http://www.aim.org.in/aim_cms/uploaded_files/engagement-
guide.pdf
21. A title is an individual magazine or newspaper brand. For instance Dainik
Jagran is a title of Jagran Pakashan or Time Out is a title licenced to Paprika
Media.
22. These numbers maybe at odds with the `13 billion figure you see in the
FICCI-KPMG report 2013. This is because the `16.5 billion is taken from
an EY report on magazines that I reckon is closer to reality.
23. A BtoC or business-to-consumer magazine or newspaper is targeted at a
larger more general mass of people, say Outlook or India Today. A BtoB or
business-to-business publication is targeted only at people within a certain
trade or business.
24. ‘Size Matters, but for who?’ Jim Chisolm, futureofthenewspaper.com
25. Jagannathan, N.S., 1999.
26. Roughly individual letters of the alphabet are moulded out of metal and
joined together in a sequence of sentences to print. A page made thus is
imprinted on any variety of materials, such as bromides or rubber plates.
These in turn carry the impression on to paper.
27. There are some differences in the dates for the launch of many of these
newspapers depending on the source. According to two different sources,
Sambad Kaumudi was launched in 1820 and 1821. For the sake of consist-
ency I will stick to only one of these. N.S. Jagannathan, 1999.
28. Mammen Mathew’s grandfather’s brother, Kandathil Varghese Mappillai,
was the founder of Malayala Manorama. Mammen Mathew’s father (K.C.
Mammen Mappillai) followed in his footsteps.
29. See portion on regulation.
30. Even the film industry during this time was flush with post-war profit. For
more details see chapter on Film.
31. Data from INS, RNI and ABC sites in March 2013. RNI registers all print
titles, though its name suggests that it registers only newspapers. The Audit
Bureau of Circulations audits circulation numbers and The Indian News-
paper Society is an industry body.
32. This incidentally is true for TV news channels too now.
33. A large part of this was the result of a foreign exchange shortage that was
constant in those days.
34. Of course publishers too were not blameless. Most industry insiders ad-
mit that many publishing houses were guilty of under invoicing of news-
print when they had actually bought more. The surplus was sold off in
the black market. In some years publishers made more money from the
sale of newsprint than from publishing. Others registered newspapers got
licences to import newsprint which was then sold at exorbitant rates.
35. The Press Institute of India in New Delhi still houses some of the maga-
zines brought out during the Emergency.
Print 63
36. The 11 essays appeared in the Economic and Political Weekly during
January–March, 1997. Jeffrey’s work is by far the most comprehensive and
insightful piece of writing on the Indian press that I came across.
37. Much of the Eenadu experience has been sourced from Jeffrey’s essays.
38. Mid-Day positioned itself as an ‘All Day’ paper from April 2011. It now
sells more than 70 per cent of its copies through home delivery.
39. Chitralekha is a leading Gujarati and Marathi weekly. Kapadia has been
with the Lokmat Group and DB Corporation before setting up a firm.
ideas@bharatkapadia.com specialises in media consulting.
40. Most of the data for this part comes from old Businessworld articles and
BCCL’s annual reports.
41. BCCL’s financial year is June–July.
42. While newsprint is indeed under open general licence (OGL), it is still a
restricted item. A publishing company needs an authorisation letter from
the RNI before it can import newsprint.
43. While satellite TV came into India in 1991, it really took off after Zee and
several other private broadcasters, like Sony, Home TV or Sun TV came
into the market between 1991 and 1995. That is why I refer to 1995 as the
take off point.
44. A&M and some of the other magazines have since shut down.
45. The two parted ways in 2008.
46. Deccan Chronicle expanded in a frenzy and piled up too much debt. It is
now in financial difficulties and could be taken over.
47. For more on this read ‘The Dhoni Effect’, a report on the growth of small-
town India from EY and ‘Is regional the new national?’, a two-part series I
did on the growth media in small town India on afaqs.com in August 2008.
48. Indian Readership Survey or IRS data for quarter 3, 2012—sourced from
the MRUC website.
49. The actual cost will vary depending on the number of pages and amount of
colour in that particular edition.
50. Later she joined Zee TV, then Zoom and in 2005 she joined Radio City as
CEO.
51. Part of the reason was also because language newspapers did not have the
best technology for colour reproduction.
52. See http://www.auditbureau.org/guide/ for the guidelines.
53. Merchant was formerly with IMRB and had worked on NRS from its in-
ception till she quit IMRB. She is now retired.
54. Data on IRS is sourced from the Media Research Users Council’s website,
www.mruc.net.
55. The HPI is based on a calculation of 50 variables derived from IRS. The
SEC or socio-economic classification is proving inadequate when it comes
to explaining propensity to buy. HPI tries to address that. Of the 50 vari-
ables, 22 are about durables ownership, 18 are on FMCG usage and the
rest are demographic variables—highest education in household (HH),
chief wage earner’s (CWE) education, the housewife’s education. The
durables and FMCGs are chosen on the basis of penetration—there is an
inverse relation between penetration and the durable chosen. So, between
a 2-wheeler-owning HH and an AC-owning one, the latter is the choice.
Each HH is scored and then a composite score is arrived at. This composite
is then indexed to 1000 so that it is comparable to all rounds of IRS data.
You could look at the data in different ways—look at all HH with an HPI
of more than 200. In Delhi how many HH are in the top one percentile or
Delhi’s average versus some other city, so on and so forth. This is invalu-
able for advertisers who want to correlate product consumption to media
consumption.
56. She is currently with Star India.
57. Cost per Mille or Cost per Thousand or cost percentage. In Latin Mille
means thousand.
58. Eight Trends to Track in 2008, From measuring total audience to hyperlo-
cal news coverage, newspapers are auditioning new business practices in
2008, PRESSTIME staff writers, Newspaper Association of America.
59. Up to 2008, this section has been put together by me along with Anish
Dayal, Advocate, Supreme Court of India and a specialist in media and
entertainment law. All updates post 2008 have been done with the help of
Abhinav Shrivastava, an associate with the Law Offices of Nandan Kamath,
Bangalore.
60. This provision is still on the statute book under Section 124A of the Indian
Penal Code and prescribes punishment up to life imprisonment.
61. Supreme court refers to the Supreme court of India throughout this chap-
ter, unless stated otherwise.
62. See Bennett Coleman vs. Union of India (1972) 2 SCC 788, AIR 1973 SC
106; Sakal Papers vs. Union of India AIR 1962 SC 305; Indian Express
Newspapers vs. Union of India (1985) 1 SCC 641.
63. Express Newspapers vs. Union of India AIR 1958 SC 578.
64. See Romesh Thapar vs. State of Madras AIR 1950 SC 124; Brij Bhushan vs.
State of Delhi AIR 1950 SC 129.
65. See Prabha Dutt vs. Union of India (1982) 1 SCC 1; State vs. Charulatha
Joshi (1999) 4 SCC 65.
66. See Tata Press Ltd. vs. Mahanagar Telephone Nigam Ltd. (1995) 5 SCC 139.
67. See Consolidated FDI Policy, paragraph 6.2.8.2, Ministry of Commerce
and Industry, Government of India.
68. See Consolidated FDI Policy, paragraph 6.2.8.2.1(i) Ministry of Com-
merce and Industry, Government of India.
69. Guidelines for Publication of Indian Editions of Foreign Magazines Deal-
ing with News and Current Affairs, Number 14/4/2008-Press (Part-1) dated
December 4, 2008, issued by the Ministry of Information and Broadcasting.
70. The RNI is a notoriously bureaucratic and difficult body to deal with. Most
permissions to launch a title or even change the name of one, take more
than 6–12 months, if not more.
71. See K.M. Mathew vs. K.A. Abraham (2002) 6 SCC 670.
72. Guidelines on HIV/AIDS and the Media, Press Council of India, available
at http://presscouncil.nic.in/guidelines%20on%20HIVAIDS.pdf
Print 65
73. See Media Reporting on Children, Press Council of India, available at http://
presscouncil.nic.in/Guidelines_on_Media_Reporting_on_Children.pdf
74. The Press Council (Procedure for Inquiry) Regulations 1979.
75. A huge thanks to Amol Dhariya, director, IDFC Capital for help with this
section.
76. Earnings Before Interest, Taxes, Depreciation and Amortisation.
77. http://www.fastcompany.com/1806749/new-york-timess-nick-kristof-
journalism-digital-world-and-age-activism
78. FICCI-KPMG Report 2013.
CHAPTER 2
Television
The Indian television market is finally coming into its own.
O n the face of it, television1 is doing as well or as poorly as the

rest of the media and entertainment industry. If you look at
the numbers for growth, these are on par with those of the indus-
try at about 12.5 per cent CAGR.2 That, however, is misleading.
If there is one segment of the media business that has got its act
together between the last edition of this book and this one, it is
television. From an operational and structural point of view, the
Indian television business is finally entering a stage that should
become the stepping stone to higher growth. It is now hugely
consolidated at both the broadcasting and the distribution end.
On the broadcast side, five networks—Star, Sony, Zee, Sun and
Network18—control over 65 per cent of all TV viewing in India.
On the distribution side, six large direct-to-home (DTH) opera-
tors control over 51 million homes homes.3 Within cable, too, a
handful of large players—Hathway, InCable, DEN Networks—
are emerging. In many ways, digitisation is driving this consoli-
dation and making some of the most fundamental changes to
the television business. Thanks to DTH and a 2011 legislation
that has mandated cable digitisation, the Indian television mar-
ket is set to emerge from the profit-squeezing, structural chaos
that has dominated its existence so far. Simply put, digitisation
increases the capacity of the pipe that delivers television signals
to your home by 10 times and more. (More on this in Caselet
2a—Everything you wanted to know about digitisation.) So these
two trends—consolidation and digitisation—will dominate eve-
rything about this `400 billion business in the coming years.
In the last edition, I had talked about why the industry was doing
badly—it was going through the pain of transition. In the five years
68 THE INDIAN MEDIA BUSINESS
ending 2010, the operating margins for Indian broadcasters had

halved to about 13 per cent. They were half of what print media
earns and less than half of what the TV business in Brazil would
earn. That transition is still happening, but the worst is over. Going
by the deadline set by the government, by the end of 2014, all of
India’s 153 million TV homes should be digital. By 2016, many of
the benefits of digitisation should start kicking in.
That is when the twin effects of consolidation and digitisation
will start kicking in. And that is when the world’s second largest
TV market should finally start to deliver on the promise of its
volumes (see Table 2.2). We should see the emergence of a televi-
sion market that has more revenue flexibility, less dependence
on advertising revenues, more programming variety, more niche
programming and better profitability.
Some of the early signals are already coming in. The launch
of three kids channels in 2012, the focus on youth programming
and English entertainment are a result of the data that digital
homes, already one-third of the total, are throwing up. Going by
the Television Audience Measurement (TAM) research data for
the first few weeks post digitisation, there are many more sur-
prises.4 For example, the sampling of, say, Tamil programming
is going up in Delhi (see Caselet 2a).Then, there is the effect on
revenue: for most broadcasters, DTH now contributes more to
pay revenues than analogue cable.5 (See ‘The way the Business
Works’.) DTH was the first mode of digital distribution to come
into India in 2003. As cable digitises too, thanks to the new law,
pay revenues should go up from 10–15 per cent to 30–40 per cent
of the topline for most large broadcasters.
There couldn’t be better news. At over 46 per cent of the top
line of the Indian media and entertainment industry, TV has a
huge influence on its mood and shape (see Table 0.1). It is, along
with films, the segment that defines the contour, body and tastes
of the Indian market.
This, however, is where the good news ends.
To cash in on the opportunities that the combined forces of
consolidation and digitisation unleash, several things have to
fall in place. The metrics, regulation and pricing are just a few
of them. Most are in a state of flux, either because the industry
cannot deal with them in unison or because the regulator sim-
ply doesn’t get it. Take metrics for instance. There was a huge
TELEVISION 69
ruckus in 2012 when NDTV filed a billion dollar plus lawsuit

against Nielsen Holdings in a New York court alleging corrup-
tion in ratings. The question of doctored ratings remains.6 But
what is amazing is that the industry continues to drag its feet on
kick-starting BARC7, the body that was supposed to devise and
implement a new rating system.
Take the case of news broadcasters. While television news is be-
ing reviled for various reasons, discussed later, news broadcasters
are blocking the very moves that will help change things. They are
so hung up on carriage fees and costs that they simply cannot see
beyond the next six months into a fully digital future where com-
modity news will become irrelevant. What they should be working
on is differentiating their content, investing in it and giving up on
short-term advertising gains for now. The news broadcasters who
start the process now are the ones most likely to survive.
Or take the regulator, the Telecom Regulatory Authority of India
(TRAI). It is hell-bent on applying to television, the principles
it applied while regulating telecom. The effects so far, have been
disastrous on most counts—primarily price regulation.

The Issues
To be fair, the TV business has got its act together in getting
the two main bodies that represent it—the Indian Broadcast-
ing Foundation (IBF) and the News Broadcasters Association
(NBA)—up and running. They lobby on issues, inform the media
about its stance and actually perform a critical role in the whole
fractious ecosystem that has defined the Indian television busi-
ness for long. The IBF, in fact, has been responsible for pushing
through the legislation on digitisation.
So, some hygiene factors are in place, but huge gaps remain.
Lack of Unity
In mid-2012, NDTV filed a lawsuit against Nielsen Holdings, al-
leging that the latter brought out corrupt data. Ever since then,
there has been a stream of invective against TAM and a large
noise for change. However, the fact is that TAM was appointed
by a joint industry body that simply did not do its job (see sec-
tion on Metrics). More than six years ago, the whole idea of the
Broadcast Audience Research Council (BARC) was floated. It is
a joint venture between the Indian Society of Advertisers (ISA),
the Advertising Agencies Association of India (AAAI) and the
Indian Broadcasting Foundation (IBF). Its job is to commission
audience research. But it remained in deep freeze. In 2008, for
some reason, the TRAI first brought out a policy paper on rat-
ings. In 2010, a committee under Amit Mitra did the same thing.
Finally, the industry woke up. The lawsuit and the government’s
increasing interest in ratings finally forced it to re-look into
BARC, which is up and functioning now (more on the ratings in
the section on Metrics).
The whole ratings issue is just an example of one of the most
upsetting traits of this otherwise dynamic industry. It simply can-
not seem to speak in one voice when it matters most. On anything
from price regulation and service tax to ratings and carriage fees,
the television business has trouble coming to any agreement and,
therefore, cannot lobby as one. News broadcasters have a differ-
ent set of demands from those in the entertainment segment;
DTH firms have their own agenda and multi-system operators
or cable distributors are on another trip altogether. This is the
sort of situation a government loves. It gives it room to manipu-
late policy to suit political objectives rather than take a route that
has the industry’s growth as a priority. Says Atul Phadnis, CEO
of What’s-on-India, ‘It is very convenient to bash up TAM but
there is a larger issue of methodology and accountability. And
accountability in this case cannot be dumped on one individual
entity alone. There has to be a collective sense of responsibility at
the industry level.’ 8
In most parts of the world, the industry gets together to fight
this battle using research, lobbying and what is called co-opetition.
For instance, in the US, the Federal Communications Commis-
sion (FCC) is a fairly powerful regulatory body. When the FCC
wanted to push through ‘a la carte’ pricing in cable, the National
Cable and Telecommunications Association (NCTA) worked with
an army of researchers, both outside and within, to prove that ap-
plying the principles of voice telephony to determine television
content pricing does not make sense. In India, the data on this is
TELEVISION 71
available. Yet, there is hardly any concerted economic argument

that is being thrown at the TRAI. You hear disjointed voices from
within the industry and the occasional CEO whining at a public
forum on carriage fees. But when it comes to spending money
and time commissioning research to bolster their arguments and
to actually convince the government, the media and consumers of
their point of view, the business doesn’t make the effort.
Some change is taking place with the issuance of the content
code by both the NBA and the IBF. Then, there is BARC. As I said,
some of it is getting tackled but not fast enough. What it proves is
that the industry is capable of getting together if it wants to.
Regulatory Issues
While there are several regulatory issues, most stem from one
single factor—ad hocism. Media regulation is dependent on the
mood of the government of the time. While TRAI, the broadcast
regulator, comes up with some of the finest consultation papers
and recommendations on issues to do with broadcasting, the
MIB either pays no attention to them or often changes them be-
yond recognition. There is no overarching legislation that evens
out the playing field, either in terms of investment or technology
norms, for segments across the broadcasting value chain. With-
out these basic enablers in place, the ad hocism gets a free hand.
For some reason, an excellent piece of legislation that could have
dealt with all of this, The Communications Convergence Bill, has
been put into cold storage and replaced with a half-baked Broad-
casting Bill that has, thankfully, lapsed.
Studies of broadcast markets across the world show that where
the regulator is technology-neutral and allows for a level playing
field among different distribution technologies, digitisation in-
creases. This is seen, for instance, in a study done by the Cable and
Satellite Association of Asia (CASBAA) in Hong Kong and the UK.
As a result, consumers in these markets receive pay-TV channels
and other services through multiple, competing technologies. Dig-
ital has penetrated 100 per cent of Hong Kong’s pay-TV homes.
You could argue, of course, that CASBAA is an industry body and
will lobby for more freedom and also that Hong Kong is a fraction
of India’s size and complexity. However, the fact remains that even
in large democratic markets—say, the US—evenness of regulation

has resulted in a robust television market.
The key regulatory issues in India are:
Pricing In 2004, on the back of rising protests over cable prices,
the TRAI froze and later mandated a 7 per cent increase in tariffs
for television in 2005. Later, in 2007, it extended this to all cable
networks across India. While the Telecom Disputes and Settle-
ment Tribunal (TDSAT) rejected the order, in March 2009, the
Supreme Court upheld TRAI’s decision.9
However, TRAI’s penchant for price regulation is completely
at odds with the nature of the business. The authority is apply-
ing the same logic that it applied to voice, a commodity service.
It pushed through mandatory pricing in telecom and as compe-
tition increased, consumers benefited, volumes rose and firms
started cutting prices themselves. Yet, they made money because
the volumes rose.
In television, however, the product is not a commodity—
television content comes in different shapes, sizes, textures and
it costs differently. For instance, a cricket tournament lasting a
few days could cost million of dollars while a top-rated talk show
might take half a million rupees an episode. So much depends on
the stars, the production house, how much the channel spends
on promoting the show, its success and therefore advertisers’
willingness to pay for it. Mandating prices of the television
signals that carry these shows is like insisting that all fruits and
vegetables should sell at the same price. For long, broadcasters
have complained about this, but without effect.
The best way to understand this is through the debate that
took place between the NCTA and the FCC in the US some
years back. The FCC wanted to push through ‘a la carte’ pricing
because it believed that cable prices in the US have been rising.
On the other hand, the NCTA argued that the FCC was using
the wrong measures to look at cable pricing. It questioned the
FCC’s logic of using telecom as a benchmark to regulate cable
video prices. Both average revenue per minute and the Con-
sumer Price Index (CPI) are essentially metrics used for voice.
The NCTA proposed using Price per Viewing Hour (PPVH),10
similar to the average revenue per minute metric in the wireless
telephone industry.
TELEVISION 73
Since the FCC had no mechanism at all that adjusts for quality,
it showed that cable prices were moving up. When measured using
PPVH, the real price of expanded basic cable service was shown
to have steadily declined in the US. Unfortunately, in India, while
such data exists, broadcast associations do not use economic logic
to beat down price regulation. They just lobby with long-winded
arguments. Even if they just plotted average cable prices per home,
irrespective of hours watched, and adjusted them for inflation, the
chances are it would show a fall in real terms.
Even without that data, there is enough evidence across the
world to show that flexible, free markets such as Australia, New
Zealand, Hong Kong, the UK, Malaysia and Singapore, among
others, have the highest rates of digital pay-TV penetration.
Satellite space11 The other major regulatory issue that could
stump growth, especially of pay revenues, is that of Ku-Band
transponders. Essentially, these are the satellites that are needed
for DTH transmission. Each Ku-Band transponder can pack in
between 9 to 14 channels of good quality with MPEG 2 (moving
picture experts group) technology and twice that number with
MPEG 4. Both of these, MPEG 2 and MPEG 4, help compress
audio–video data and are called ‘compression technologies’. As
luck would have it, a bulk of the DTH operators in India are on
MPEG 2, so their ability to increase channels on their existing
transponders is limited.
To this, add a satellite capacity constraint. Regulations state
that for licence applications, preference should be given to firms
using Indian satellites. The problem with doing that is though
Indian Space Research Organisation’s (ISRO) Insat satellite
system has done a great job, it cannot fulfil the market demand for
Ku-Band services required by DTH licence holders. According to
a CASBAA report12 only 18 of the 73 transponders used by DTH
companies such as Sun Direct or Dish TV, are on Indian satellites.
The rest are all on foreign satellites. By 2017, India is expected to
have 1,600 licenced channels and about 1,300 operational ones.
This will need DTH operators to use 222 transponders. However
ISRO’s capacity is not expected to increase to more than 50
by 2017. There are enough private foreign satellites over India
that offer Ku-Band capacity. While access to foreign satellites
is technically permitted, it is, however, through ISRO. So,
effectively, foreign satellite operators are barred from providing

services directly to DTH operators in India.
This in turn means that DTH operators, especially the ones
with MPEG 2 technology, cannot offer more channels. They just
don’t have the capacity to do it and leasing the transponders is
not that easy since ISRO is a stumbling block.
Technology
Many of the streaming technologies (such as IPTV or mobile
TV) or the ones that offer a personal/digital video recorder
(PVR/DVR) such as TiVo on DTH, allow consumers to skip ads.
A US study showed that homes with DVRs watch 25 per cent
fewer commercials than non-DVR homes. This has tremendous
implications for advertisers. For one, it means that they can link
rates to actual commercial watching. And also they can target
homes that are watching only their commercials. But it also kills
the mass nature of the medium. However, it is only when stream-
ing technologies such as IPTV are adopted on a large scale that
the implications will be clear.
There is also a threat to advertising revenue from the growth
of the Internet, especially in mature markets, say analysts. In the
US, for instance, cable network audience size is matched by some
Internet properties.13 To this, add the Internet’s ability to con-
vert a decision into an action (buying something or signing up).
It makes the Internet an attractive substitute for cable network
advertising (See Caselet 2c). Much of this, however, is some way
from hitting India.
The Opportunities and Trends

Like I mentioned earlier, the two biggest trends are consolidation
and digitisation. These in turn give rise to multiple opportunities
to generate revenues and to improve profitability.
Consolidation
More than 65 per cent of the total TV viewing audience is now
controlled by five large networks: Star India, Sony, Network18,
TELEVISION 75
Sun and Zee Group. Please remember that this refers to the audi-
ences they control as networks. For instance, Star has 35 channels,
Sony has six and Sun has 30.14 The total of their combined view-
ership, totted up, comes to over 65 per cent. Already digitisation
is moving on schedule. This means that the fragmented distribu-
tion side of the business will get consolidated too. Currently six
DTH operators control over 51 million TV homes or one-third
of the total TV homes in India. It is safe to assume that by the
time digitisation is completed in December 2014, four large cable
companies and six odd DTH operators will be controlling the 153
million home Indian TV market.
Both fragmentation and hyper-competition have squeezed
broadcasters between rising costs and falling ad rates (see ‘The Way
it Works’). Factor in pay revenues which have not delivered. That
explains why operating margins fell in the five years ending 2010.
As their networks scale up, broadcasters will get pricing power
with advertisers. As the cable, DTH and other companies that dis-
tribute TV content grow in size, their ability to pay better share to
the broadcaster improves. Eventually as digitisation spreads and
they can market channels in tandem with DTH or cable operators,
average revenues per user (ARPUs) too should go up.
Already operating margins for some of the bigger TV firms
are creeping back to the 15–18 per cent level. In 2012, for the
first time in three years, general entertainment channels (GECs)
pushed up their advertising rates.
Digitisation
Please see Caselet 2a—Everything you wanted to know about
digitisation
Some of the other opportunities are:
IPTV
This is essentially a way of delivering television signals on the same
network that you get your telecom or Internet services on, using
Internet protocol. So, IPTV could be provided by telecom operators
and even Internet service providers. A set-top box—similar to the
one given by a DTH operator—at the consumer’s end decodes the
data, and converts it into standard television signals. This set-top

box is connected to your television and contains a hard disc (a data
storage device) which saves and streams programmes.
Theoretically, this brings flexibility to your viewing as the
stored programmes can be treated like a video tape. Functions
such as forward, rewind and pause can be used with such a ser-
vice. This is essentially what PVRs or DVRs, such as TiVo, cur-
rently provide to DTH or satellite TV consumers in the US. Tata
Sky offers the same with its Tata Sky Plus service in India.
The reports on IPTV’s success are mixed. Currently, China
with 23 million and Korea with 6.5 million subscribers are among
some of the largest IPTV markets globally (see Table 2.2).
TV on the Internet
Most of the entrepreneurs investing in television over the Inter-
net are doing it on the back of falling server prices, the rise in
broadband offtake and the rise of peer-to-peer (P2P) distribution
services. A combination of these elements allows the scaling up
of Internet TV at little cost. Much of this caters to the popular no-
tion that in the future, consumers will want their entertainment
on devices and at times that are convenient to them.
Some of the popular channels on YouTube out of India—
T‑Series, Rajshri TV, Shemaroo—give you some sense of what
is working. But these are not pure TV plays. Also, their revenue
from this source is as yet negligible.
Mobile TV
Mobile television broadcasting is a kind of terrestrial broadcast-
ing (see ‘The Way the Business Works’). Currently terrestrial
television broadcasting remains the exclusive domain of DD
under Prasar Bharati. A TRAI paper states that most of the exist-
ing handsets can be used to view mobile television services and
new handsets are not required by subscribers of third generation
(3G) mobile telecommunications networks. There are two ways
in which mobile TV could be offered:15
Through traditional mobile networks A mobile subscriber has a
two-way link with the airtime operator. This telecom link is used
TELEVISION 77
to carry voice (and very often data) to and from the subscriber.
The same link can also be used to deliver video content. So, in its
simplest form, a mobile phone user can access content stored on
the server of his airtime operators—which is what we do when
we download a song or ringtone from Vodafone’s system. The
same system can offer stored films, sports or news.
While this is not live TV, it is streaming content that can meet
several needs for information, entertainment and create a rev-
enue stream for mobile and TV companies, just like music or
wallpapers currently do. (See Chapter 6—Telecommunications.)
It liberates the subscriber from the programme schedules and al-
lows him to store such programming on other devices.
However, there is an issue with this technology. It needs sepa-
rate dedicated channels for delivery of the same content to dif-
ferent users. That means if 10 people are watching a news clip on
their mobile, there will be 10 channels reaching out to those peo-
ple, each using different slices of spectrum. Just like IPTV this
is a spectrum-inefficient technology and could cause network
congestion if several users want the service simultaneously. With
clogging and poor service quality already impacting the qual-
ity of voice services, it seems impossible for operators to offer
mobile TV services within the same 2G–2.5G system. However,
broadcasters such as Zenga TV have found technology solutions
that enable mobile broadcasting over 2G networks.16 Besides this,
3G has already been rolled out, and several companies offer edited
films and other long form content on the mobile.
Also, since this is not live broadcasting, it is difficult to offer
some of the things that could appeal to a mobile subscriber—
live news, sports—the kind of content that consumers may want
when they are on the go.
Broadcasting technologies A one way (terrestrial) broadcast net-
work can also be used to sell mobile television. The content deliv-
ery here is very similar to the FM radio tuner in mobile phones. A
mobile subscriber listening to the FM radio on his handset uses the
battery and speakers of the telephone, but the content is carried on
the FM broadcast spectrum. Similarly, the handset can be used to
view mobile television by using television broadcasting frequencies.
Various broadcasting technologies are being tried for mobile
television services around the world. According to the TRAI paper
on mobile broadcasting, Digital Video Broadcasting–Handheld
(DVB–H) is more popular in Europe, Media Forward Link Only

(Media FLO) has been used in the US. In Korea Terrestrial-
Digital Multimedia Broadcasting (T-DMB) and Satellite-Digital
Multimedia Broadcasting (S-DMB) are in use. In Japan it is One
Segment Broadcasting (OSB).
The use of broadcasting technologies for mobile television
services delivers better picture quality as compared to 3G video
streaming. However, these technologies deliver live program-
ming with little interactivity or personalisation. Streaming video,
on the other hand, offers both interactivity and personalisation
even though it cannot offer live telecast.
The Other Revenue Opportunities

Some of the revenue opportunities that are increasingly standing
out are:
Syndication As portals offering TV content or phone

services offering news take off, the opportunities
for syndication are on the up for most television
broadcasters as well as content companies. So the revenue
shares from mobile operators or portals such as Rajshri.
com (See Chapter on Film and Telecommunications) are
now beginning to add up. Plus there are the syndication
opportunities in overseas markets, especially Asian ones
where the cultural connect with Indian content is better. For
instance, at one point some years back, dubbed-in-Sinhalese
versions of Kyunkii Saas Bhi Kabhi Bahu Thi and Kahanii
Ghar Ghar Kii were the top-ranking shows in Sri Lanka.
Similarly Tamil soaps do well in Singapore and Malaysia
and Malayalam shows are popular in the Middle-East.
Pay per view Several DTH operators now offer pay-per-
view services in India. A good movie could get anywhere
between 200,000–300,000 views. At `30–50 per home, that
is a maximum of `15 million. Multiply that by ten such
films per year and you know why there is an opportunity
there. In 2013, Kamal Haasan’s Vishwaroopam tried to use
this window by releasing the film on DTH on the same day
as the theatrical release for `1,000. While theatre owners
TELEVISION 79
blocked it for Vishwaroopam, eventually the pay-per-view

window will emerge as a significant one, once digitisation is
complete (See Caselet 2a—Everything you wanted to know
about digitisation and also Chapter 3: Film).
Mobile Every time a dance or reality show has a polling
component, it is a revenue opportunity for the television sta-
tion which gets a share. Most broadcasters, even DTH op-
erators, now try to build in contests, polling opportunities
or SMSing (short text messaging) opportunities into their
programming. For instance, many television stations airing
films usually have a ‘answer this question now’ kind of con-
test about a scene or a fact from the film. The plots of popular
soaps are sought to be changed based on audience feedback.
The Programming Opportunities

Take a look at Table 2.3. Across the last five years, one thing is
evident: that several other genres of programming are flowering
and finding an audience. Kids, news and (non-Hindi) language
programming in particular have shown substantial jumps in
viewership time. Now dovetail this with digitisation which is
throwing up its own patterns (see Caselet 2a). The viewing
patterns in digital homes show a skew towards youth, sports, niche
programming. What most of this indicates is that the different
audiences within this large country have now started showing on
the metrics. So, more segmented programming will soon follow.
The Past
The Beginnings
The first experiment with television broadcasting in India in-
volved a makeshift studio at Akashvani Bhavan in New Delhi, a
low-power transmitter and 21 television sets. These were installed
in the homes of various bureaucrats and ministers. Some of the
equipment was a gift from a west European government. Bhaskar
Ghose, who went on to become Information and Broadcasting
secretary, was just a child then. He recalls with amusement that
his early memories included listening to music on television. The

accompanying video: that of the gramophone playing it!
It sounds primitive, but that is what television looked like in India
in September 1959. An entire generation, which grew up on black
and white television, Krishi Darshan and Films Division cartoons,
can recall the utter lack of imagination in the programming. From
those beginnings, it is hard to believe the scale that the television
broadcasting business in India has achieved today—and more
incredible, that it is neither government-owned nor controlled (see
Table 2.1).17
Of course the government, in all its wisdom and folly, did con-
trol television for more than three decades after India saw its first
television broadcast. The first school television service was com-
missioned in New Delhitwo years after the first few experiments.
This was for the institutions run by the Delhi Municipal Corpora-
tion. By 1965, television broadcasting matured to a one-hour ser-
vice, which included a news bulletin. In 1972, television went to
Bombay (now Mumbai), India’s commercial capital and by 1975
five more cities each had a television station called Doordarshan
Kendra.
All this time, television broadcasting was largely a terrestrial
phenomenon available in cities where the government had set
up transmitters of varying ranges. Currently, according to DD’s
website, there are 1,400 transmitters spread across India. Accord-
ing to TAM there are 134 million television homes that can re-
ceive the signals that DD sends out.18 Several milestones mark
the journey from 21 sets to 134 million of them: regional kendras,
the first commercials, national network, DD Metro, and colour
television, among others.
The Doordarshan Years

Today, many of us dismiss DD and what it dishes out. All the
same, it was DD that shaped the television broadcasting industry
in India—not by design, but by its very existence. In most parts
of the world, except in the US, it is the public service broadcasters
(PSBs) who have done the pioneering work. From the BBC to the
Canadian Broadcasting Corporation, PSBs have set higher and
higher benchmarks for private broadcasters to follow. The BBC,
for all the bad press it gets in the UK, keeps its head above water
TELEVISION 81
(just about) and yet fulfils its role of being a PSB admirably well.
It could be argued that it is the licence fees from British taxpayers
that ensure BBC’s survival. A closer look at its accounts shows that
BBC gets an increasing share of its income from syndicating its
content. In India, too, DD showed great promise in the early days.
The first satellite television experiments were undertaken by
DD as early as 1975–76. It was under the Satellite Instructional
Television Experiment (SITE) that the Indian government used
the US-based National Aeronautics and Space Administration’
(NASA) Satellite ATS-6 for educational programme broadcasts
in Indian villages. It was trying to solve the problem of weak
transmission to distant villages through the terrestrial network.
SITE was an attempt to see if bouncing the signal off a satellite
would increase its coverage. It did.
By 1978, the government was encouraged enough to imple-
ment its own satellite system. This was contracted out to Ford
Aerospace and Communication Corporation. Then came the In-
dian National Satellite (INSAT) programmes, a joint effort by the
ISRO, Indian Posts and Telegraph Department, Ministry of Civil
Aviation and MIB. The INSAT series of satellites helped fulfil the
objectives of getting DD into the maximum number of commu-
nity television sets.
Colour transmission began in 1982, thanks to the Asian
Games, hosted in New Delhi. It was around this time, in the early
1980s, that the commercial contours of the industry started tak-
ing shape. During these years DD had been serialising novels and
other works of literature. However, these did not make money;
not that they were supposed to. In 1983, came India’s first spon-
sored programme, Show Theme, produced by TV personality
Manju Singh.19 Then, in 1984, a US-based non-government or-
ganisation (NGO) approached the MIB to do a serial. This would
actually be a family-planning message couched as entertainment.
It was an experiment that had worked successfully in Catholic
Mexico, where overt family planning messages could not be
used. So, soap operas conveyed the message and helped push
down the birth rate. The idea appealed immensely to the Indian
government. That is how India’s first soap opera, Hum Log, was
first aired in July 1984.
The idea was to show a family beset with all the problems typi-
cal to a large lower-middle class Indian family: poverty, alcoholism
and illiteracy. These have also been the hallmarks of India’s prob-
lems with population, then as well as now. At the end of the show,
veteran actor Ashok Kumar would come on screen to say, in
subtle ways, that a large family was at the root of all trouble. Un-
fortunately, for family planning—and fortunately for commercial
television—the message was lost in the serial’s mad popularity.
More than 80 per cent of the 3.6 million Indian television sets at
that time tuned in to Hum Log every week.
Eventually, as former bureaucrat Ghose puts it, the serial de-
veloped a life of its own. Maggi Noodles, a brand owned by Nestlé
India, sponsored the first soap on Indian television. The multina-
tional paid for the telecast fee and production cost of Hum Log
and got about five minutes of commercial time in exchange. It
used this to advertise its brands.
The success of Hum Log egged DD on to create more enter-
tainment programming. Buniyaad, Katha Sagar, Khandaan,
Nukkad and a host of other popular serials and sitcoms followed
in the mid- to the late-1980s. Telecast fees and commercial air-
time rates on DD began rising. From `170 million in 1983–84,
DD’s revenues rose to `2.1 billion in 1989–90. By the early 1990s,
DD began charging anywhere between `100,000 to `500,000 as
minimum guarantee or telecast fees. In exchange it gave a certain
portion of the programme’s airtime to the producer.
The Cable Years

If the beginning of commercial television in India seems like
a cute accident, the origins of cable broadcasting that began
around the same time appears even more amusing. While the
precise date of cable television’s appearance is difficult to arrive
at, it is clear that it began in the early 1980s in Mumbai. Dinyar
Contractor, editor of Satellite & Cable TV magazine, reckons that
cable took off with the introduction of colour television and the
hosting of the Asian Games in New Delhi in 1982. On the other
hand, Yogesh Radhakrishnan, one of the earlier entrants, believes
that cable took off with the Los Angeles Olympics in 1984 which
kicked off a second spurt in the sale of colour TV sets. It is likely
that both these events contributed toward the phenomenon. The
cable years can be divided into the following three phases:
TELEVISION 83
First Comes Plain Cable

Regardless of the year, it began with viewers’ desire for a sharper
reception, especially in Mumbai where tall buildings hampered
the quality of terrestrial transmission. That is how entrepreneurs
like Siddharth Srivastava (ATN), Radhakrishnan, Jagjit Kohli,
Yogesh Shah, Ronnie Screwvala and companies such as Nelco
stepped in.20 Men like Shah and Kohli offered to set up one mas-
ter antenna for entire buildings with one cable running from the
antenna. This eliminated the problems of multiple antenna for
different flats with their multiple wires criss-crossing the build-
ing and cluttering the terrace. Anyone who lives in Mumbai will
know that the terrace is a precious space. The cooperative soci-
eties that run these buildings were glad to have someone clear
them up. In exchange for doing this, these one-man outfits were
paid installation charges of `500 and `40 or so per household
per month for service.21
In evolutionary terms, therefore, cable growth in India is some-
what similar to that in the US. In the US, cable television evolved
because homes in hilly regions could not get a clear reception of
terrestrial broadcasts. The growth of cable in both markets rode,
to begin with, on the terrestrial network. The difference is that
it happened in the US in the 1960s and 1970s, whereas in India,
the beginning was in the mid-1980s. The other big difference is
that local authorities quickly took over in the US and territories
were sold to the highest bidder, so that only one cable operator or
company controlled cable operations in one area. In India, that
did not happen. Since there were no official guidelines, operators
mushroomed, propelled first by the video boom and then by the
coming of satellite television.
Cable TV Joins Video

Around the same time that cable began to snake its way around
Mumbai, the video boom hit India. Since each building was
wired up through a common cable, it could be easily plugged
into a video cassette recorder (VCR) at one end to show a movie
and, therefore, earn extra money. Thus began the true growth of
cable television in India. The local cable operator in most areas
would show a couple of Hindi movies daily. The tapes were of

poor quality and there were too many ads, but it was manna from
heaven for an entertainment-starved country. There are many
stories about how cable originated and expanded in India, one of
the more interesting ones is narrated by Contractor.
The Nelco story Contractor was working with the beleaguered
colour television set manufacturer, Nelco (a Tata Group compa-
ny) at that time. The senior management saw cable as a means
of pushing the sales of its TV sets. It began selling the idea of a
cable hook-up to five-star hotels. If a hotel bought its television
sets, it would throw in an additional three VCR channels plus
two of DD at `20 per day per television per occupied room. The
three VCR channels were essentially re-runs of programmes
and movies taped overseas. Just like hot water or telephone, the
hotel could offer cable television to its patrons. Nelco managers
toured towns like Jaipur and Udaipur selling the concept and
almost all the Tata Group hotels, like The Taj and the President,
bought into it. Ronnie Screwvala, one of the many entrepre-
neurs who emerged at that time, did the programming tapes
and maintenance. He was paid `1.25 per room per day. ‘In two
years our business peaked,’ recalls Contractor.
The cable entrepreneurs There are other equally interesting sto-
ries on how cable operators emerged. For example, as a young
man, Yogesh Shah had a lot of time to spare after working at the
family business of trading in textile chemicals and dyes. When
he saw some people checking out his uncle’s television at Shanti
Nagar in South Mumbai for a common antennae system, he of-
fered, on impulse, to do it. Within a few days he had the contract,
wired-up the building with 120 connections and was charging
`60 per home for showing two movies a day.
Similarly, Jagjit Kohli, a textile engineer, saw a cable system
in operation in South Mumbai in 1986—and was hooked. He
decided to wire-up one building in Andheri, a northern sub-
urb of Mumbai, for a lark. A year later, in 1987, he wound up
the small textile business he was running to concentrate on the
cable operation. By this time, he had 700 cable connections in
the suburbs paying him `70 each per month. ‘Those days a size
of 500 (subscribers or connections) was considered very good,’
remembers Kohli.
TELEVISION 85
The lure of cable for all these young men was very clear—
money. It did not need too much investment, just the chutzpah
to decide that it was perfectly safe to invest in running cables
across trees and roads. This, when no one was sure whether it
was legal (as it turns out, it was illegal). All it needed was a VCR
and the money to rent a few video tapes a day plus a man to go
and collect the money from people’s homes. That roughly meant
an investment of `15,000 and approximately another `3,000 to
`5,000 in running expenses, taking the total to roughly `20,000
a month. This could yield anywhere between `50 and `80 per
home. Multiply that by an average of 100–150 subscribers that
a typical operator had. Many of the youngsters who set up these
businesses were making anything between `50,000 and `75,000
a month, a lot of money in those days.
Not surprisingly, thousands of people jumped into the
business, overcrowding it, undercutting each other and stealing
customers. By 1990, there were 3,500 cable operators in
Mumbai, though how many homes they covered in that year is
not known. Incidentally, till this time cable television had not
seriously spread beyond Mumbai. The convenience of wiring
up a building and getting a dozen or more households at one
go was possible only there. It was somewhere around the late
1980s, early 1990s, that cable television moved to Delhi and
other parts of India.
Also, till the early 1990s, cable was limited to small-time en-
trepreneurs showing movies. There was the odd video magazine
like Newstrack from the Living Media Group. However, except
for BCCL and Living Media, no major media house showed
the slightest bit of interest in this new opportunity. The other
players who entered the business were either film producers or
small-time entrepreneurs, or even creative people such as Amit
Khanna.22
The Cable Skirmishes

The other bit of important history, from the same time, is that
of the skirmishes between film producer, cable operator and
video right owner. Typically, video rights were given away with
all other rights. However, most producers or video right owners
never thought that one tape would be shown to hundreds of

homes at the same time. This robbed them of revenues they
would have earned if the tape had been rented by each home
that was viewing it on cable. There are many examples of legal
cases, consortiums and infighting, which marked the indus-
try throughout this period. In 1989, in a landmark judgement,
Justice Sujata Manohar of the Mumbai High Court maintained
that broadcast via cable was public viewing and that cable op-
erators needed a copyright to show films.
The Satellite Years

Thus, in its own disorganised, albeit entrepreneurial, fashion
cable continued to grow and prosper. Strangely, a government
that loved regulating just about anything, seemed not to have
noticed this phenomenon. The first piece of legislation came
only in 1995. Industry observers quip that it is precisely because
there was no regulation that television has achieved the growth
that it has.
CNN Comes to India

What propelled cable, however, was satellite broadcasting of a
popular cable news channel from America! To repeat a piece of
popular history, when the Gulf War broke out in early 1991, five-
star hotels bought dish antennae that allowed guests to watch the
war live. These hotels were already networked with cables and all
they needed was an antennae that could catch the Cable News
Network (CNN) signal.
Cable operators too took to satellite broadcasting immediately.
For them, it meant an investment of `200,000 (which soon fell
to `25,000) in the dish antenna. All they had to do was catch
the signal and transmit it over the wires already connecting sub-
scriber homes to their control rooms. They also needed a few
thousand rupees more for amplifiers to boost the signal. Soon,
satellite dishes became a common sight throughout the country.
Thus, it was CNN, the first cable news channel in the US, that
brought satellite television to India.
TELEVISION 87
According to the news reports from that time, there was talk of
CNN charging US$ 1 per hotel room that it was being screened
in. CatVision, one of the few companies selling dish antennae,
was the exclusive licensee for CNN. In effect, CatVision fran-
chisees were the only people allowed to bundle CNN along with
the dish antennae they sold. The reports also detail the problems
that arose because CatVision claimed to be authorised to collect
pay revenues on behalf of CNN.
The next logical step for anyone in the business was to launch
a satellite channel. Unfortunately, there weren’t too many satel-
lites that could beam onto the Indian subcontinent. Most were
beat up Russian satellites like Gorizont and these were not geo-
stationary: operators had to keep twisting their dish every now
and then to receive clear signals as the satellite moved across the
sky. Siddharth Srivastava, a cable network owner, attempted to
launch ATN on one such satellite only to shut it down.
The Birth of Star and Zee

A little earlier, in 1990, Hong Kong-based billionaire Li Ka Shing’s
Hutchison Whampoa Group, had bought ASIASAT 1, the only
geo-stationary satellite over the Indian Ocean. It was a scrapped
Chinese satellite that had its own parking space. Shing repaired it
and gave it to his son, Richard Li. He then launched Star (Satellite
Television Asian Region), the only channel beaming into China
and India, in August 1991. Star began by beaming Prime Sports;
it later added MTV (Music Television), BBC and Star TV to its
bouquet.
Around the same time, Li Ka Shing was also looking for
companies that could buy space on his satellite. Almost every
major Indian cable network owner approached him. So did
BCCL’s Times TV and a then little-known entrepreneur, Subhash
Chandra. Finally, Chandra won the much-coveted slot on the
satellite and started broadcasting Zee TV. Asia Today Limited was
formed as a 50:50 joint venture between Star and Zee. Subhash
Chandra’s Zee TV, launched in October 1992, became India’s first
privately-owned, Hindi satellite channel. It began with three-hour,
largely film-based programming broadcasts before graduating to a
24-hour broadcast of sitcoms and soaps.
Zee was what Indian television audiences had been waiting for.
As they rushed to get this exciting new channel on their televi-
sion sets, cable operators thrived and penetration increased. By
the end of 1992, India had 1.2 million cabled homes; by 1993, the
number had more than doubled to 3 million. In 1994 even that
figure had quadrupled to 11.8 million homes (see Table 2.1 as
given earlier).
The Forex Crisis, Murdoch’s Entry and Other Happenings

As luck would have it, India went through a gut-wrenching for-
eign exchange crisis in 1991. The effect of this was felt in 1993
when an Reserve Bank of India (RBI) circular said that only com-
panies with more than `1 million in exports over each of the
two previous years could buy the dollars needed to advertise on
a Star or a Zee. There are some who believe that the foreign ex-
change crisis was used as an excuse to hurt potential competitors
to DD. It created a piquant situation where even multinationals
that wanted to advertise on these channels could not unless they
had RBI clearance. Some advertisers got a case-by-case clearance
from the RBI while others used the State Trading Corporation,
which was allowed to use dollars for this purpose.23
Around this time, Li Ka Shing had sold off 63.6 per cent of
his stake in Star to Rupert Murdoch’s News Corporation for US$
525 million. By March in the same year, Star had broken up with
MTV and BBC. By 1994, there was talk of pay and encryption,
again, rather accidentally. Star Movies claims it was the first to
encrypt its analogue signals. That was because it had the right to
show movies only in certain countries, but the satellite footprint
went beyond them. That brought up the thorny issue of paying
right holders for beaming a movie in, say, Afghanistan, when it
had rights to show it only in India. So, it had to encrypt its signal.
This period also saw the entry of what are now India’s largest
non-Hindi television players. Sun TV began broadcasting with
one Tamil channel. This has now gone up to 30.24 Sun currently
dominates the viewership in all the four Southern states and is
one of the country’s largest broadcasters. It was also marked by
the rapid expansion of cable into regional markets—led by broad-
casters themselves, most of the time, such as Sun TV’s Sumangali
TELEVISION 89
Cable. In others, it was a natural corollary of the popularity of

cable television. For example, in Andhra Pradesh, the launch of
Eenadu TV saw cable penetration take off.
The Growth Years

By 1995, India had begun to resemble a respectable broadcasting
market, prompting research agencies to offer electronic rating sys-
tems (explained later in this chapter). It also created a scramble in
the media buying and selling world, as options other than print
and outdoor exploded. Soon, larger Indian players jumped into the
market. Home TV from the stable of Hindustan Times (now HT
Media), Sony Entertainment Television (now Multi Screen Media)
promoted by Sony Corp subsidiary Columbia Tristar (along with
a bunch of Indian investors), Eenadu TV from Andhra Pradesh’s
largest publishing company and a whole lot of serious players start-
ed entering the market. What was so far a cottage industry of types,
run by cable operators offering channels from Star, Zee or local
cable channels, was becoming bigger and bigger. This year also saw
the passing of the Cable Act (see ‘The Regulations’).
As the number of channels kept increasing, so too did the
problem of small cable operators who did not have the space or
the money to continue investing in dish antennae, cables and am-
plifiers. Besides, when broadcasters started charging operators
for showing their channel, it meant two things. First, the operator
had to start paying anywhere between `2 to `30 for a bouquet of
channels and second, he had to invest in decoders. A pay chan-
nel is broadcast in an encrypted signal, which cannot be received
without a decoder. Star Movies, one of the first to encrypt, offered
operators a package of `40,000, of which `23,750 was the cost of
the decoder. All in all, for a small cable operator with 200–300
subscribers, the whole operation was becoming unwieldy.
The Birth of MSOs25

This is when multi-system operators (MSOs) made their first ap-
pearance. Major broadcasters or cable companies backed by seri-
ous corporations or consortiums of cable operators began setting
up large control rooms or ‘headends’. These had the dishes and
the equipment capable of receiving many more channels than

a small cable operator could afford. They offered the signal to
the small cable operator on the basis of a fee per subscriber. In
turn, the small cable operator could give this signal to the sub-
scriber, over whom only he had control/access. For example, in
1994, United Cable Network (UCN), a consortium of five South
Mumbai operators, was one of the first few companies to set up
a headend or master control room. Broadcasters like Zee set up
Siti Cable (now Wire and Wireless Limited or WWIL). Other large
players such as Hathway Cable from the Rajan Raheja Group, RPG
Cable and InCable from Hinduja, all started offering signals or the
‘feed’ as it is called in industry lingo, to smaller operators for a fee.26
As small operators started aligning with MSOs; their numbers re-
duced from about 60,000 nationwide, to the current 30,000.27
If it sounds a little confusing, think of cable television distri-
bution in India as a chain that starts from the signal that broad-
casters send to the cable operator. Cable operators then relay this
signal into our homes. By mid-1995–96, this chain had a new
player, the MSO in the middle. The MSO is a wholesaler of the
signal while the small operator remains the retailer. Of this chain,
the small operator was and still is the most powerful link. That is
because he controls the last mile to your home. He is the person
who collects the money from you every month. He, therefore,
controls a significant portion of the revenues in the TV broadcast-
ing business. If we take an extremely conservative average of `150
per household per month, for India’s 153 million cable and satellite
(C&S) households over12 months, the total is over `275 billion.
The Arguments for Pay

According to estimates just about 15–20 per cent of this `275
billion ends up with MSOs and broadcasters.28 This happens be-
cause small operators routinely under-declare their subscriber
base. You just have to touch upon the issue to see broadcast-
ers, MSOs and cable operators all go on the defensive, each
for a different reason. While many of the arguments probably
don’t hold in light of a rapidly digitising India, it is important
to understand them to fully appreciate why digitisation is such
a boon.
TELEVISION 91
The cable operators’ argument Cable operators love to point to

markets in developed countries. In the US, a cable company
charges a certain amount for a basic package of channels. The rest
is then bundled and sold in different packages at different prices.
Households buy the package they want and pay for that alone.
This is made possible through a set-top box called a Conditional
Access System or CAS system, installed in subscriber homes.
This is referred to as ‘addressability’. Think of the set-top box as
an electric metre. It enables the operator to supply the channels
that you want. In most markets across the world pay TV, whether
digital or not, is possible only with a set-top box. How else can a
household be billed? When cable operators point this out, they
have a valid argument.
Most TV channels in India encrypted themselves without
providing addressability. As a result, if an operator covered
1,000 homes of which only 600 watch a certain channel, he
had to pay the broadcaster and the distribution network for
all the 1,000 homes. Therefore, if he had 1,000 subscribers, he
may admit to 250. Then the next year’s negotiation would yield
another 100 and so on. The yearly negotiation on declarations
is usually full of fights and switch-offs. ESPN–Star Sport has
possibly had the maximum number of stand-offs with operators.
The Maharashtra Cable Sena banned it as early as 1996. Some
years back, the Mumbai High Court ruled that cable operators
could not cut off signals when they fought with broadcasters
since that would affect a third party which is not at fault—the
consumer.
The broadcaster/MSO stance Most broadcasters/MSOs dreaded
the transparency addressability would bring. Many lobbied hard
against it when the government mandated it in 2002 with the
CAS amendment to the Cable Act. Also, it involved an invest-
ment of roughly `3,000 to `5,000 per box per household. Even if
you take a lower-end box of `3,000, the whole enterprise could
cost roughly `126 billion. Then, there is the `50,000 to `100,000
per channel per cable system for hardware, and `1 million for
subscriber management software at the cable operator level.29
Unless MSOs or broadcasters were sure that they could control
the last mile or access to revenues, they were not willing to make
this kind of investment.
The Growth Pangs

The joint venture agreement between Star and Zee created in-
teresting accidents in broadcast history. For example, one clause
stated that not more than 50 per cent of Star’s programming
could be in Hindi. Similarly, Zee could not launch sports chan-
nels because Star already had Prime Sports. However, by 1999,
Star and Zee had broken up: very loudly and very publicly. Zee
paid Star US$ 322 million for its stake in the joint venture and both
Chandra and Murdoch heaved a sigh of relief—and the battle for
eyeballs reached a different level. Once it was free of the no-Hindi
clause, Star re-launched itself as a full-fledged Hindi channel.
Around this time, regional channels too were appearing on the
scene at regular intervals. Besides Sun and Eenadu there were now
several channels in every major Indian language. The reasons for
this rush were easy to understand. Transponder costs had crashed
from about US$ 3 million at the beginning of the decade to US$
200,000 to US$ 300,000 by 2003. The other is the manner in which
the ad market has expanded to absorb more channels. As a per-
centage of the total ad market, TV has been steadily increasing its
share. There are several genres that gained as a result—news and
children, for example (see Tables 2.3 and 2.4 a, b).
DD Gets Hit
The struggling state broadcaster never recovered from the body
blow of audiences fleeing to cable and satellite channels. It at-
tempted to flank its revenues through DD Metro, a full-fledged
entertainment channel; and to its credit it did succeed to some
extent. Then, in July 2000, it leased a three-hour slot on DD Met-
ro for `1.21 billion to HFCL-Nine Broadcasting for a year. As
a result, for the first time in more than five years, DD began to
make inroads into the lucrative cable and satellite homes with rat-
ings for some programmes touching six television rating targets
(TVRs). However, DD refused to renew HFCL-Nine’s contract
in 2001 and put the same slot up for re-bidding. HFCL-Nine, a
joint venture between Kerry Packer’s Publishing and Broadcast-
ing Limited and Indian-owned Himachal Futuristic Communi-
cations Ltd, then shut its Indian operations.
TELEVISION 93
Today, the only captive audience DD has is the 10 million

homes that have no other option. According to IRS 2005, cable
and satellite penetration, especially in rural India—DD’s strong-
hold—grew at twice the rate at which it has grown in urban In-
dia. In May 2000, former Nasscom head Kiran Karnik, Infosys
founder Narayana Murthy and consultant Shunu Sen submitted
a report on Prasar Bharati.30 The report contained an analysis of
its main problems—overstaffing and a lack of direction. It made
some sensible recommendations on how the corporation could
work better. The report was largely ignored.
The government keeps deciding how one of India’s largest
broadcasting companies will be run. That’s sad because DD hap-
pens to have some of the best assets in the business. If its roughly
1,400-tower network is put to good use, as the Shunu Sen Com-
mittee report suggested, it could do both—public service broad-
casting and generate revenues. Till now, DD relies on a budgetary
support that keeps rising every year. In 2011–12, its revenues stood
at `14 odd billion. This covered just about 48 per cent of its operat-
ing cost of `28.9 billion. The rest of the money came from taxpay-
ers. There is talk of cutting budgetary support down. Till DD is
financially independent, it cannot administratively or otherwise be
free of government control; and because it depends on the govern-
ment financially, it can never be free to make money. There is now
another committee under Sam Pitroda that is looking at DD. The
one sliver of good news from DD is the launch of DD Direct Plus
in 2004. This free DTH service for which subscribers just have to
buy a box and the antennae themselves from any dealer is doing
very well, going by reports. In 2012, it was estimated that DD
Direct Plus was in 8–10 million homes.
Forcing Addressability
In the absence of a seriously competitive terrestrial broadcaster,
cable has had a free hand in India. It was during 2000–02 when
blackouts, court cases and consumer complaints kept erupting
that the government tried to usher in addressability. An amend-
ment to the Cable Television Networks (Regulation) Act, 1995,
in mid-2002 made it mandatory to watch pay channels only with
an STB.
The flaws in CAS This amendment and the government’s subse-

quent attempts to force it through had two inherent problems that
led to its failure. First, the law and the notifications that followed
it mandated that 6.7 million homes in the four metros should be-
come CAS-enabled by mid-July 2003 or within six months of the
act being amended. Anywhere else in the world, a CAS roll-out is
staggered over several years, with maybe 100,000–200,000 homes
being covered at a time. Considering that India is an opaque
market where conditional access technology had not been tested
it seemed logical to attempt this one city/area at a time.
Second, the amendment was silent on who would foot the bill.
Since MSOs and broadcasters had no control over the last mile,
they were reluctant to put up the money. By default, it had to be
the consumer. Globally, industry reaps the maximum benefits of
addressability. That is why it subsidises part of the cost of install-
ing set-top boxes. In fact, in most markets the demand and the
initiative for addressability have come from within the industry—
not been mandated.
On the ground, too, cable operators and broadcasters lobbied
hard to have the amendment changed, revamped or dropped.
Neither wanted the transparency: operators because their ‘real’
coverage would come to light, and broadcasters because their
‘real’ viewership would be apparent. Only MSOs like Hathway
and InCable, among others, invested money in buying CAS boxes
and systems. However, the amendment was eventually whittled
down and then ignored altogether. It was during this mess that
the TRAI was appointed as the broadcast regulator for carriage
(not content).
The Logjam Gets Worse

By 2003 it was evident that something was seriously wrong with
the way TV signals were being sold in India. There was—and still
is—a logjam on cable. There are over 800 TV channels aimed at
India whereas a TV set can take in only 56–106 of them. This is
besides the hundreds of local cable channels, the ones that show
pirated films. Both MSOs and operators started charging a car-
riage fee, literally a fee to carry a channel, on their system. Many
TELEVISION 95
also started demanding a placement fee in addition to that. This

was a fee to place, say, an IBN 7 just before NDTV India or to
shove Star News on to a hard-to-catch frequency and Aaj Tak on
a better one.
This started putting tremendous pressure on stand-alone
broadcasters. Almost every new channel launch brought more
money for cable operators and MSOs since they controlled the
pipes. As long as there were 50–60 channels, it did not matter.
But, as the numbers grew, the structural problems of cable—its
fragmented, unorganised, opaque nature—were beginning to
impact both advertising and pay revenues.
The industry’s advertising revenues are hit when cable opera-
tors keep shifting channels and viewership falls. Between 2002
and 2004, advertising growth on TV began to slow down. For
the two years starting 2003, yield per 10 seconds of ad time on
TV actually fell for a majority of broadcasters. Second, pay rev-
enues were hit because even popular channels now had to pay
a placement fee, cutting into their subscription revenues. Since
there is a mandated 7 per cent increase in cable rates, by TRAI,
the scope for broadcasters to keep increasing rates to make up
on this was limited.31
The problem was accentuated by the limitations on TV sets.
Like elsewhere in the world, TV sets in India can only receive
analogue signals. And, as with TV transmission systems across
the world, the last mile in India is analogue. That explains the
limit of 56–106 channels in spite of the quantity of spectrum
this uses—between 550 and 750 Mhz. Currently, all channels are
transmitted in the digital mode. Most of the MSOs convert them
to analogue and then send them to operators.
The Ways Out of the Logjam

Digitising the last mile was therefore critical. Any digital deliv-
ery into consumer homes could only happen with a set-top box,
regardless of who was selling the TV signals—a terrestrial, cable,
broadband (IPTV) or DTH operator. If set-top boxes were in-
stalled in every home that bought digital TV signals, address-
ability and 100 per cent transparency was guaranteed. There were
therefore three solutions to this logjam: One, digitise cable; two,

and/or push for alternate modes of broadcasting such as DTH or
IPTV; three, digital terrestrial television.
Option one A digitised cable system can easily be made two-
way. That means it becomes capable of offering voice or access to
the Internet, or other services that require interactivity. But more
importantly, it simply expands capacity by anywhere between
10–14 times. That is because the space that one analogue channel
uses can accommodate between 10–14 digital ones. Just digit-
ising the current network could increase capacity to 560–1,000
channels on the existing network. There were, however, two is-
sues involved.
The capital cost of digitisation (we are talking of figures around
2002–04) was anywhere between `700–3,000 per subscriber on
a good urban network depending on the number of subscribers,
according to a TRAI paper. That meant the total cost could be
anywhere between `42–180 billion on just the headend.32 Then
there are the set-top box costs. The more the people, the lower
the capital cost according to TRAI’s paper on digitisation. This
would require price deregulation during the transition to digital,
tax sops on the equipment, licencing the cable business, increas-
ing the foreign investment levels for cable (49 per cent then) and
allowing operators to offer voice. All of that would add up to a
substantial incentive to invest. Look at the way multiplexes took
off after they were given a tax holiday in some markets.
Then there was the time and the patience digitisation de-
manded (and still demands). That went beyond the capacity of
a chaotic market like India. It took (and takes in the countries
still digitising) 7–15 years going by the standards of developed
countries. Remember, they are smaller, less complicated markets
than India. The UK, which began mandatory digitisation in 1998,
will complete the process only by 2012. While the pipelines are
being upgraded, signals are being simultaneously broadcast in
digital and analogue mode. In India, after over 20 years of un-
regulated growth it would be too much to assume that this will
happen smoothly.
The problems are evident when you consider that in 2009,
seven years after CAS was mandated, there were just about 1.3
million digital cable homes in India against 20 million (paying)
TELEVISION 97
DTH homes. The 1.3 million includes homes in areas which do

not fall in the mandatory CAS zone.
Option two This was my favourite option; a broadcaster or
MSO could decide to seed the market with set-top boxes and
spend money, time and pain on digitising, say at least 10 million
homes. Assuming he has that many homes signed on, his ARPU
will automatically rise since his ability to offer Internet access,
gaming or even voice telephony increases and he could charge
more. That in turn would encourage other companies to jump
in as happened in digital cinema.33 Mukta-Adlabs decided that
there was potential and seeded 70 theatres with `1 million worth
of equipment in each. When theatre owners began earning more
money, others came in to make India one of the world’s largest
digital-theatre countries in the world. If seeding of the market
takes place in cable, it would be wonderful. That is because, tech-
nologically, cable is the best broadband pipe for entertainment.
Option three Incentivise alternatives to cable: this is probably
the most practicable of the lot. The progress on this front was
pretty slow till 2004. When the DTH policy was announced in
2001 it came with several restrictions that put investors off. Then
in October 2003, the Essel Group, that owns Zee, launched Dish
TV. In 2006 another operator, Tata Sky, came in. By 2008, India
had half a dozen large players—such as Airtel’s Digital TV and
Sun TV’s Sun Direct—fighting to put set-top boxes in TV homes
and sell TV signals. That is what led to the growth of the market
from 0.75 million homes in 2005 to over 51 million in 2012.34
The other technology besides DTH that could be incentiv-
ised is IPTV. In 2004, when TRAI recommended unbundling
the last mile that telecom companies owned, there was some
hope of IPTV taking off. But it never became policy. If any-
body—cable operators or Internet service providers (ISPs) or
other telecom companies—had been allowed to use Mahanagar
Telephone Nigam Limited (MTNL) or Bharat Sanchar Nigam
Limited’s (BSNL) last mile copper to offer television to the 32
million homes they reach, there could have been immediate
competition for cable.
Eventually, of course, digitisation was the consequence of DTH.
And the amendment to the Cable Act in 2011 now mandates that
all TV homes in India have to have a digital addressable system.
This means that analogue cable too will have to digitise. The
process has already begun (See Caselet 2a).

The product of what started in 1959, moved forward in 1984 and
took off in 1992 is what we call the Indian television broadcasting
industry. Its structure is rather haphazard, unlike the US market,
the world’s favourite benchmark for any media business. The In-
dian broadcast industry has a DNA, a genetic code that is its own,
that has little or nothing to do with how the US market, guided
by the FCC, evolved. There are several cross-media restrictions
based on readership and viewership in the US. In contrast, the In-
dian industry has had no regulation whatsoever, except for some
acts from 1885 and 1933 that determined the state’s hegemony
over broadcasting. Its imperatives for growth, adopting technol-
ogy or business are home-grown to a great extent. For example,
television software is still a separate industry unlike in the US,
where most broadcast companies buy out software producers or
integrate backwards by setting up their own production arms.
The Indian television broadcast industry can thus be regarded
as a chain with three links: broadcasters, distributors and television
software makers. Each is an important component in ensuring that
the final product—viewer experience—is good. The television soft-
ware industry is the first link in the chain. It is the point at which
all the value in the business—that is, the programming—is created.
This is then sold to broadcasters who package channels around this
programming; throw the signals at a television tower or a satellite.
These can be downlinked and distributed in several ways.
Software
Though it is probably the smallest link in size, television software
is the origin of all value creation in the broadcast industry. At a
time when the bulk of the investment in broadcasting is going
into creating a distribution infrastructure, the importance of
software cannot be overemphasised. This becomes apparent
looking at China: because it lacks a democracy, it has inhibited
TELEVISION 99
the growth of a robust software industry (a complex set of rules

means that the authorities frown on a vast variety of programmes
which would be considered perfectly innocuous in India). This
has created a demand–supply gap that is now seriously affecting
the growth of the Chinese TV broadcasting industry. All the
money put into building great television distribution is pointless
unless there is programming to be carried on that network.
The Backdrop
The Indian television software industry is largely an offshoot of the
film industry. In the initial days when DD was looking for soft-
ware, it was the film industry that had the people, the skills and
the equipment needed to churn out entertainment software. The
trend continues. Some of the best-known names in the business
have their roots in the film industry.
Remember that Manohar Shyam Joshi wrote Buniyaad and
Ramesh ‘Sholay’ Sippy directed it. Dheeraj Kumar, a former film
actor, started his own production house, Creative Eye. In DD’s
heyday, Creative Eye was a fixture on its network with serials
like Adalat. It churned out some hugely popular mythologicals
like Om Namah Shivay and Shree Ganesh for private broadcast-
ers. Later, Asha Parekh, a former film actress, produced the very
popular Kora Kaagaz on Star Plus and then, Kangan. Aruna Ira-
ni, another actress, has had a big hit in weekly soaps, Des Mein
Nikla Hoga Chand. Actress Radhikaa’s software firm, Radaan Pic-
tures, has produced some of the biggest hits in Tamil and Telugu
languages. And of course, the largest TV software company in
India, Balaji Telefilms, was created by Ekta Kapoor, the daughter
of veteran actor Jeetendra.
The size Ever since the satellite TV boom hit India in 1991,
the software industry has enjoyed a scorching pace of growth.
The demand for entertainment software, films, shows, soaps
and sitcoms has continued to rise. From a few hours for DD,
there is a need for at least five to eight hours of original pro-
gramming a day for over 50 channels. That’s a mind-boggling
91,250 hours a year, not including news channels that do their
own programming.35An average cost of `150,000 for every 30
minutes, pegs the industry’s size at `13.68 billion. This growth
has increased the number of software firms from a handful in

the 1980s to approximately 6,000 currently. These are primar-
ily one-man outfits. This has meant extreme fragmentation and
thin profits for individual firms. There are very few firms with
the scale and the staying power to generate hundreds of hours
of software, consistently over several years like the `1.2-billion
Balaji Telefilms (as of 2011–12).
The costs The second thing that has happened as supply rushed
to meet demand is that costs have jumped exponentially. From
about `30,000 to `50,000 per 30-minute episode in the 1990s, the
cost of making a show (for a broadcaster) has gone to anywhere
between `50,000 to `1 million. A soap opera (a long-running
continuous story), a talk show or a sitcom (situational comedy)
will all have a different set of costs. For instance, a sitcom or talk
show is relatively less expensive to produce.
The cost paid for an episode of fiction range between `400,000
and `1.2 million. For non-fiction, the prices could go up to over
10 million since many of them have celebrity hosts. They come
at a steep price tag. Of course, much depends on the genre, the
language, the production house and the broadcaster.
The Software Revenue Streams

Software houses typically depend on two revenue streams:
Selling or leasing36 Selling is the outright sale of software to

broadcasters, all rights included. Alternatively, the software
company could lease telecast time from a broadcaster. It
could then sell the airtime. This is how it works for DD
and for at least 50 per cent of the programming on Sun TV.
In such a case, the software house owns the rights to the
programme after a one-time telecast.
Syndication, dubbing and overseas markets These are
additional revenue streams that software firms owning
the copyright can exploit, just as broadcasters can. This
money is pure profit since the cost of the software is usu-
ally recovered from the first telecast. Firms like Creative
Eye or Cinevistaas sit on a lot of software that was made
TELEVISION 101
for DD but to which they own the copyright. This can be

used to generate revenues through syndication, dubbing
or online through a YouTube kind of outlet. Many shows
from software houses or broadcasters are dubbed in Ta-
mil, Telugu or other languages either for markets within
India or overseas. For instance, one of Zee TV’s biggest
hits in recent years has been Pavitra Rishta. It is a remake
of Thirumathi Selvam, a Tamil show that aired on Sun TV
first and was made by Vikatan Televistas. There is a large
Tamil population in Malaysia or a Malayalam-speaking
group in the Middle East. There are many Indian software
firms like Balaji Telefilms or UTV that sell their Indian
shows to broadcasters in these markets.
Broadcast
The second link in the chain is the broadcaster.
The Broadcast Business Models

There are two different business models that the television broad-
cast industry uses:
Buy and Telecast Broadcasters buy programming out-

right from television software companies. The price
could range from `50,000 to `1 million, or more per
episode. It depends on several things, the language, the
genre and the production house among other things.
Sitcoms and talk shows are less expensive to make since
they are studio-based. Soaps are more expensive. Simi-
larly, game shows may seem cheaper to make since they
are studio-based but if the anchor is a big name—Kaun
Banega Crorepati (KBC) would be an extreme example—
the cost could be high. A soap or sitcom in Marathi or
Bangla costs a fraction of what it would in Hindi, a high-
ly competitive genre.
Broadcasters then package the software with promos,
which are advertisements for the channel or network’s
own programmes. Star News could carry promos for Star

Plus’ soaps or Star Gold’s films and vice versa.
Lease and Telecast A second business model is the one
used by DD and Sun TV.37 Typically, DD gives away air-
time in slots of 30–60 minutes for a telecast fee or mini-
mum guarantee. This could range from `0.3–0.4 million
depending on the time slot and advertising revenues it
expects the programmes to generate. It also gives the
producer a fixed proportion of seconds, called free com-
mercial time (FCT), which he sells in order to recover his
money. The producer can pay extra to buy additional sec-
onds. The seconds that he has not used can be ‘banked’.
Production companies like Balaji Telefilms and Crea-
tive Eye that have traditionally been suppliers to DD and
Sun TV, have built up their own ad-sales teams, which sell
airtime. More significantly, after a one-time telecast, DD
or Sun TV do not have any right over the software since
they do not buy it; they just lease out airtime to telecast
it. Sun TV, for example, prefers this to the ‘commission-
ing model’ where the software belongs to the channel.
Sun’s Chairman, Kalanithi Maran, reckons that the tel-
ecast model ensures basic cash flows since producers pay
money upfront for the slot. Broadcast networks in the US
too used this model for a long time before deciding that
there is a lot of value in integrating vertically into making
their own software or buying it outright. Cable networks,
on the other hand, charge a premium for creating original
programming that you could watch only on that channel,
for example HBO.
The Broadcasting Revenue Streams

This packaged software is then used to generate revenue from the
following streams:
Advertising This is the revenue generated through airtime
sold to advertisers. This is done through advertising agencies
or through media houses such as GroupM or Madison. While
the international norm is five minutes of advertising time per
30 minutes of programming, it is normal for Indian channels to
TELEVISION 103
stretch their ad seconds into the programme if they find buyers

for an exceptionally popular show. India is probably one of the
few markets in the world where, while the volume of advertis-
ing sold on television has risen dramatically in the last few years,
rates have actually fallen in real terms, because there is so much
discounting and bonusing. This refers to the practice of giving
bonus seconds on sister channels or programmes as an add-on to
advertisers buying on prime time. Bonus seconds are also offered
for not delivering on television rating targets (TVR). Typically,
bonus seconds drag down average realisation per 10 seconds.
To capture more of the advertising rupee going to other gen-
res, broadcasters started putting together ‘bouquets’. Zee TV has
a general entertainment channel, Zee Cinema (a movie channel);
Zee News; Zee Cafe, regional channels and so on, taking the total
to 34. In this way, Zee has more advertising seconds to cross-sell.
If an advertiser is taking a package of, for example, Zee and ETV
Marathi, Zee could offer him Zee Marathi and Zee TV as a pack-
age to ensure that all the money comes into the Zee kitty.
Pay This revenue is the money that comes from subscriptions.
Internationally, advertising to pay as a proportion of revenues
hovers around 55:45. In India it is 80:20 (see ‘The Past’).
The overseas market In the past few years, the overseas mar-
ket has emerged as a key revenue stream. Indian channels like
Zee TV or Sun TV have discovered sizeable audiences in the UK
and the US. Zee, for instance, reaches out to 650 million people
across 168 markets in the world.38In the year ending March 2012,
going by its annual report, the company had an overseas turnover
of over `4 billion, or 13 per cent of the company’s revenues. The
company beams its 22 international channels through various
distribution platforms such as BSkyB, DISH Network, Comcast,
Time Warner and NTL.
That means that a subscriber wanting to see Zee TV in the
UK, for instance, has to pay his cable operator anywhere between
£ 9.99 and £ 16.99 a month depending on the package he chooses.
A share of this comes to Zee TV. The distribution of channels
overseas is lucrative for broadcasters because programming costs
are negligible and the market is almost entirely pay driven. Most
broadcasters re-run the soaps that are made for the Indian mar-
ket with fresh promotions and ads from the local market where
the channel is being telecast. Almost every major broadcaster—

Star, Colors, Sun, NDTV, among others—has forayed into the
international market in the last few years.
Mobile and Internet These are emerging streams for broadcast-
ers and could take various forms. It could be simple contests,
audience reactions to shows or a news story or pure broadcast
of television on mobile. For instance, Viacom18 has a deal with
Zenga TV which then retails Colors on the mobile.
Distribution
The other important constituent of the broadcast industry is the
distributor. This could be a cable operator/MSO combine, a DTH
operator or a telecom or broadband company (see Table 2.5).
The Distributors
The three distribution platforms currently used in India are:
Cable This has been discussed in great detail in ‘The Past’. Just
to add, the cable signals that we get on our television sets are
broadcast on the C-band, which has a wider arc and therefore
a wider spread. First, MSOs catch the signal, and sell them to
cable operators who in turn resell them to consumers. When
these signals are sold without a set-top box, they make for a
non-addressable market. With an analogue or digital set-top
box, it is easier to track who is buying what.
DTH DTH operates like regular broadcasting, the only differ-
ence being the frequency at which the signal travels (DTH oper-
ates in the Ku-Band) and how it is received. The viewer has to buy
a dish and a set-top box and can then receive the signals that a
DTH operator sends directly. Therefore, unlike cable where there
are two intermediaries, the MSO and the cable operator in DTH
there is only one—the DTH operator.
Every DTH service has an electronic programme guide (EPG).
Think of an EPG as a website’s homepage on the Internet. The
EPG is an on-screen guide that details all programmes according
to genre, time and channel. It can be navigated with a common
TELEVISION 105
remote control both for the television and the DTH. If there is an
interesting film, the EPG could give a quick synopsis that can help
subscribers make up their mind on whether they want to watch
it. You could choose to see what is on various channels in small
pictures or text. For example, Active News on Tata Sky allows the
subscriber to view what each news channel is doing and choose
accordingly, similarly for films. Showcase, Tata Sky’s pay-per-view
channel, allows viewers to choose a film every 30 minutes.
Then there is a high-end service which includes a digital video
recorder (DVR).39This allows a viewer to ‘time-shift’: he can
pause live programming and come back to it after attending, say,
a phone call.40 It can be programmed to record even while the
viewer is not home. It can record up to 100 hours of programming.
This is the equivalent of what Tata Sky is offering as Tata Sky Plus.
The equipment is installed and maintained by the DTH operator.
It involves wiring, a set-top box and a dish antenna. A smart card,
which is usually topped with credit beforehand, is inserted into
the box and a subscriber can only watch what he has paid for. In
case he wants to watch a film on a channel he does not subscribe
to, he calls in for the amount to be debited from his account.
An account can be topped up from the mobile phone, online or
through direct payments.
Terrestrial This form of broadcasting is currently the exclusive
domain of the state-owned DD. It works by relaying signals across
the 1,400 plus towers. There are various possibilities for increas-
ing the capacity of terrestrial broadcasting by digitising signals.
This is called Digital Terrestrial Broadcasting or DTT. Then there
are the possibilities for mobile television broadcasting, best done
through a terrestrial network.
The Distribution Revenue Streams

There are three main revenue streams for most distributors:
Subscription It currently forms the biggest chunk of distribu-
tor revenues. This is the money cable operators/MSOs or DTH
operators collect from homes. They charge anywhere between
`100–500 per household per month, depending on the city,
locality, the package and so on. If the operator is affiliated to an
MSO, `50–100 per subscriber per month goes to the MSO (refer
to the part on ‘cable industry’). Anywhere from `5–40 per sub-
scriber per home goes to individual broadcasters. In the case of
Dish TV, a DTH operator, it may give a commission to the deal-
ers who hawk its dishes and set-top boxes.
Advertising It is another major stream. Most operators and
MSOs have their own channel, such as CCC from Hathway. These
are advertisements from local retailers or regional brands or for
local events. A retailer in Lajpat Nagar, New Delhi, could be ad-
vertising on a cable network in South Delhi, the area where the
potential buyers for his store would reside. These advertisements
are broadcast along with the films shown. While exact numbers
on the size of cable advertising are hazy, a safe estimate would be
`11.71 billion.41
Carriage and placement revenues Currently, there is a logjam on
India’s cable pipes. Since bandwidth is limited, cable operators and
MSOs now make money from carriage and placement. Carriage
is a fee literally for carrying any channels. Placement on the other
hand is the charge for placing it in a favourable band or position
vis-à-vis competition (see ‘The Past’). This is a temporary revenue
stream till digitisation is complete (See Caselet 2a). The carriage
rate that some really large MSOs charge is anywhere between `0.5
and300 million per network per year. These could be higher for
channels which are new launches and need carriage desperately.
Placement, the money paid by a broadcaster to ensure that
his channel is on a good frequency, may also be paid separately.
It could be paid to ensure that a channel, like CNBC-TV18, is
placed before its competitor, say NDTV Profit, on the viewer’s
television set.
The shifting typically happens in three cases.
One, when there are many launches, as in 2007. The old chan-
nel pays to retain its position on the television set and the new
one to keep it close to popular channels such as Star Plus or Sony,
so that the opportunity to sample it is higher.
Two, in the 225 TVR towns:42 that is where TAM’s Peoplem-
eters, the ones that track viewership patterns, are installed. Many
broadcasters try to ensure their presence on the cable system to
ensure that their viewership numbers do not fall. If they do, ad-
vertising drops.
TELEVISION 107
Three, in an area, say Lokhandwala, Bandra or Versova in

Mumbai, where many media buyers or advertisers have their
homes. This ensures that the channel is available in all the places
where key decision-makers on advertising might be watching.
The Metrics
The Basic Metrics
To understand how media buying and selling operates in the tel-
evision business and the essentials of why a channel gets better
rates than others it is critical to understand ratings, airtime and
advertising rates.
Ratings
There is currently a lot of debate on the adequacy or the lack
thereof in the rating system. So, delving a bit into its history
might give some perspective. But first, a definition.
What is a TRP? Many of us read and talk about ratings or
TRPs/TVRs, but what precisely is it?43 A TVR is a time weighted
average of the total time that people in the sample homes spend
watching a certain soap or programme. If 10 people in 10 homes
spend different amounts of time watching Kolangal on Sun TV,
the average of this, weighted by the time each has spent, becomes
the rating the programme gets. Ratings can be for one minute,
five minutes, 15 minutes or 24 hours. When channels share their
ratings, they typically cherry-pick the time that suits them best.
If music channels are most watched from 7 to 8 pm, MTV
might pick only the time slot that shows it at the top. In that time
period, MTV might have a rating of five, but on a 24-hour ba-
sis it may actually have a rating of 0.06. It is extremely crucial
to understand what, why and how ratings are arrived at. This is
because every decision—on whether to advertise on a channel,
the products and brands to advertise for, when to air them, and
which programmes to choose—is based on ratings. Ratings help
in deciding what genres are working, what are not and to change
the channel strategy accordingly. In 2004–05, when comedies
began to do well, several channels launched sitcoms. Similarly,

2007 and 2008 saw a wave of reality shows of all hues and colours.
How ratings began Indian broadcasting has had a healthy history
of using tools to measure audiences and their responses. Accord-
ing to Hemant Mehta, senior vice president, IMRB International,
the first measurement of television was formulated in 1983. IMRB,
the research arm of ad agency Hindustan Thompson Associates
(now JWT), did a viewership study on what people saw and when.
The data on the actual launch of continuous ratings measurement
systems is hazy, but according to Sankara Pillai, former general
manager, media research at ORG–MARG, it began in 1986.
Three research agencies, IMRB, MRAS-Burke and Sameer
(then the research arm of Mudra Communications) introduced
a system to measure the popularity of programmes on DD. It
was the only broadcast channel in India then, the rest were cable
channels. Pillai, who was with IMRB then, remembers that one
of the projects he was part of was the launch of the diary system
of measuring ratings. IMRB distributed roughly 3,600 diaries in
eight Indian cities based on the demographics of the people that
advertisers wanted to talk to. There were many people who did
not own a television set then. They watched it at a neighbour or
friend’s home. As a result, IMRB had two diaries—primary and
secondary. Both the television owner and the secondary (guest)
viewers filled them out.
Anyone who watched a programme for five minutes or more
was considered a viewer. Along with the gender, income and age
of the person writing in it, the diary was meant to record what
that person saw for five minutes or more. The diary had time
slots; and all a viewer had to do was fill in what programme he
or she was watching at that time. If Ramayan had an 80 per cent
rating, it meant that 80 per cent viewers (in single-TV homes)
had watched it for five minutes or more. These reports were then
collected, the data collated and ratings arrived at. It was a fairly
rudimentary method, no different from how it began in devel-
oped markets like the US.
The birth of TAM After 1991, it became important to also cap-
ture what cable and satellite households were watching, and that
is when IMRB and (then) MARG introduced rating reports for
cable and satellite homes. The method was the same, only this
TELEVISION 109
time viewers had to write what they were watching on say Star or
CNN or MTV, instead of just DD. By 1995, the crush of satellite
channels was so immense that both IMRB and (by then) ORG–
MARG finally decided to invest in Peoplemeters. While accurate
costs are not available, it is estimated that a metre costs several
million to install and maintain.
A joint industry body (JIB)—comprising advertisers, agencies,
channels etc., was constituted. Three agencies were supposed to
pitch. Just before the pitch, A.C. Nielsen and IMRB joined hands
to offer the Television Audience Measurement (TAM). In July
1996, the joint industry body chose this. However, since funds
were a problem, TAM did not take off immediately.
Meanwhile ORG-MARG launched INTAM and started offer-
ing its service. A year after the joint industry body’s proposal,
TAM finally obtained the funds to launch its service. That is
how India ended up with two television measurement systems.
‘In most countries there is only one system,’ says L.V. Krishnan,
CEO of TAM Media Research. The takeover of A.C. Nielsen in-
ternationally by VNU (the parent of ORG-MARG) meant the
merger of these two services in 2002. While TAM is currently the
currency for television ratings in India, in 2004 another agency,
aMap, too started a service in India.
How TAM works TAM uses the frequency-matching technol-
ogy. Rather simply, the metre attached in viewer homes registers
the frequency of the channel the viewer is watching for a minute
or more. It then matches this with the map of the frequencies for
each channel in its bank. If you were on the Zee TV frequency
for more than a minute, you are a Zee TV viewer. The method
could have one problem. Cable operators routinely change the
frequencies at which they send the signal for a channel. Krishnan
maintains that by monitoring cable operators regularly, TAM
catches any change of frequency at which a channel is broadcast
and updates its system accordingly.
The data is downloaded, either in tape form or via a laptop onto
the agency’s servers. It is then collated and analysed. There are scores
of different kinds of reports—by genre, demographics, channel,
languages, cities, states, areas and so on—that are generated using
the data. The typical consumers of this data are software houses,
television channels, advertisers, ad agencies and media-buying
agencies. In 2006, the last year for which this figure is available,
they paid anywhere between `400,000 and about `10 million a
year as subscription fees, depending on the reports they buy.
These reports are then used to devise marketing, programming,
distribution or advertising strategies.44
In July 2013 TAM covered 225 towns in India with 9,500 Peo-
plemeters that covered 36,000 people.45
The birth and death of a Map In mid-2004, Ahmedabad-based
Audience Measurement and Analytics set up an alternative rat-
ing system called aMap. It started with 1,000 metres in Mumbai,
Delhi and Ahmedabad and, when last tracked in 2008, it had
6,000 meters. Though it used the same method as TAM to record
the ratings, it was different in one major respect. TAM picks up
the data from viewer homes every Saturday. There is a lag of at
least a week before anyone knows what happened to a show or a
match. However, the aMap server logged into the meter between
2 am to4 am every morning and picked up the data. This was pos-
sible because it used a GSM (Global System for Mobile commu-
nications) modem to get real time access to the data. So, buyers
and advertisers could actually see the ratings online and decide
that they wanted to change their media plan. This was especially
useful for big-ticket reality shows or during elections or budget
analysis when the window of opportunity to schedule advertising
spots was limited. An overnight or online look at ratings helped
utilise it better. The market however could not support two rating
system and aMap is no longer in existence. 46
Other rating systems Besides these two systems, DD has its own
Doordarshan Audience Research Television Ratings.
The trouble with ratings47 Till 2005, there were very few com-
plaints about TAM ratings. The trouble began when competition
and then hyper-competition kicked in. From 354 channels in
2006, India had almost 700 in 2012. TAM responded by increas-
ing its sample to 9,602 meters. This covers 35,000 people but is
hugely inadequate in a market with 153 million TV homes and
about 700 million viewers. Soon niche genres in growth mode
started having problems.
Take news. From about 39 in 2005 there are currently over 135
news channels in India. The competition and resulting revenue
TELEVISION 111
pressure forced business heads to start slicing and dicing the data
to somehow prove that they were ahead of competitors. However,
cutting data too fine on a small sample size, threw up all sorts of
weird skews. For example, a really obscure show could emerge on
top of the charts. ‘If you apply statistical significance, the error of
sampling is 34 per cent for niche areas such as news’, says Sunil
Lulla, Group CEO, Times Television Network.
The skews were used as examples of corrupt data. Then whis-
pers on data fixing too started. It is against this background that
the government got into the act. TRAI first came up with a policy
paper on ratings in 2008. In 2010, a committee under Amit Mitra
suggested increasing the sample size to 30,000 meters, forming
BARC and a cess on the industry to fund the growth. In 2012,
NDTV sued Nielsen Holdings, one of TAM’s parent companies,
in a court in New York.
The birth of BARC In 2007, industry associations in the adver-
tising and media industries had got together to form the Broad-
cast Audience Research Council (BARC) to oversee and control
the TV audience measurement system in India. The idea was to
have a not-for-profit body with share capital coming in equal
measures from the Indian Society of Advertisers (ISA), IBF and
Advertising Agencies Association of India (AAAI). However,
nothing happened for six years. When the government started
showing interest in ratings and the NDTV-Nielsen skirmish hap-
pened, the industry revived BARC.
The implementation of BARC indicates three big positive
changes.
One, it separates the research vendor (say, TAM) from the pro-
fessionals who decide the methodology. ‘A vendor owned-vendor
managed system is always suspect. The Indian Readership Survey
(IRS) is less prone to attack because of MRUC (Media Research
Users Council)’, says Paritosh Joshi, principal, Provocateur Ad-
visory. MRUC, an industry body, commissioned readership re-
search till recently.
Two, an industry-commissioned research breaks the whole
process, thereby reducing error and corruption. BARC has bro-
ken the process into four parts. The establishment survey, being
done by IBF’s Broadcast India, will determine sample size, panel
homes and so on. Then comes designing the survey. The third
part is metering the panel homes and the last phase is processing
the data. Globally, there are only four agencies capable of work-
ing on TV metrics: RSMB, Ipsos Mori, Nielsen and Kantar. TAM
is a joint venture between Nielsen and Kantar, two of the largest
ratings agencies in the world, in India. So in all probability TAM
will be part of any new system.
Three, a body such as BARC can ensure constant monitoring
of methodology. This is critical in fixing issues other than sam-
ple size. This includes representation of, say, rural areas, of dif-
ferent clusters of audiences and viewing patterns. For instance,
many advertisers are spending increasing amounts on digital
media. They want to have a comprehensive look at what people
are watching. The current system does not offer that.
The big issue? The funding. ‘BARC was formed only when
broadcasters raised money’, says Lulla. So the big question that
TAM has raised over the years, on who will foot the bill, will
come back to haunt the industry. The cost of an additional 22,000
meters is estimated at `6.6 billion. And if, as Lulla says, there
should be ‘one meter for every 1,000 homes’, the cost could go up
to `30 billion. There are no clear answers on this. Joshi reckons
that if the broadcast industry agrees to spend at least half a per
cent of their revenues on research instead of the current 0.01 per
cent, funding should not be a problem even if advertisers don’t
pitch in. Remember that advertisers in any case do not buy rat-
ings data; broadcasters and media agencies do.
Advertising Rates
The rates are usually fixed for every 10 seconds or 30 seconds of
advertising time bought. These are called spots. Ad rates differ ac-
cording to the time of the day for which they are bought. The ad
seconds bought during prime time, usually from 8 to 11 pm, are
the highest-priced on any channel anywhere in the world. This is
the time entire households generally watch television. The rates
during the other parts of the day, called non-prime time rates,
are usually lower. If a particular part of the day starts registering
higher viewership, the ad rate of that slot goes up. All television
broadcasting companies have a rate card; almost nobody follows
it in practice. Discounting is common and average realisation per
10 seconds could vary wildly from channel to channel.
TELEVISION 113
There are various ways in which discounts can be given.

One, as a straight percentage cut on the card rate. This could
vary anywhere between 20–70 per cent depending on the chan-
nel, the time of day and how desperate it is.
Two, discounts could be given as bonus seconds. If HUL buys,
say, 20 spots on prime time on Star Plus, it could get five bo-
nus spots on non-prime time shows as a preferred buyer or be-
cause a show it advertised on did not deliver on the promised
TVRs. The bonus then becomes a way of making good. India is
not unique in this respect. In the US, some spots (ad seconds)
on the four networks—ABC, NBC, CBS and Fox—are auctioned
in advance.48 These upfront buys could get quantity discounts of
up to15 per cent. The rest of prime time inventory is sold closer
to the broadcast dates and if a programme is a big hit, like Who
Wants to be a Millionaire on ABC, a network could hike rates
dramatically to reap huge profits.
In India too, the system of upfront buys, before a programme
begins airing, exists. However, many of these are locked in rating
deliveries. If Pepsi buys time on a new soap on Zee TV, it will do
so for 13 episodes on the guarantee of certain rating points. If
Zee TV cannot deliver on those rating points, it makes up with
a hefty discount or with bonus seconds. That explains the rise in
the volume of ad seconds without a commensurate rise in broad-
casting revenues.
Airtime
The economics of airtime buying and selling operate similarly
anywhere in the world. For any television channel, airtime is just
like the number of rooms in a hotel or seats in an aircraft. For an
airline, selling a ticket at a discount or even a loss is better than
not selling it at all since filling capacity is crucial. Similarly, when
there are huge tracts of unsold airtime it is logical to recover at
least a fraction of variable costs. Of course, a lot of broadcasters
in India stretch the argument the other way around. It is nor-
mal for several to eat into programme time during a hit show to
make more money. While the international norm is five minutes
of ad time per 30 minutes, it is not unusual to see top rung chan-
nels in India carrying 10–15 minutes of advertising on popular
shows. There is a downside to it, though: it puts off viewers. In
2012, TRAI released a consultation paper that talked about en-

forcing a rule under the advertising code in the Cable Act of
1995, which limits advertising to 12 minutes per clock hour. In
March 2013, it issued a note enforcing that ruling. It has also
made it mandatory for broadcasters to file regular reports on
how much advertising they carry. Under an agreement arrived
at between broadcasters and the TRAI, the former have agreed
to reduce ad time gradually by October 2013. From October
1, 2013 the TRAI will monitor ad time very strictly and issue
show-cause notices to violators. 49
Due to bonus seconds, discounting or stretching, the way in
which efficiency is measured or even media budgets are planned
is not quite cut and dried. Advertisers do factor in discounts and
shrink their budgets accordingly. Which is why it is essential to
look at some of the ways advertisers/buyers try to get media ef-
ficiency out of airtime buys.
The Efficiency Metrics

When DD was in its heyday, the media planning and buying as-
signments were not about getting maximum reach, efficiency
or impact—the otherwise usual goals for a media buyer. It was
about scheduling advertising seconds on the best shows. That
is because reach was a given since DD was the only channel. A
popular show or a Hindi film ensured an audience of 70–80 per
cent of TV homes. The only job for a media planner and buy-
er was to decide how to split his money between DD and print
media. Most of them booked slots for the year. They then spent
the rest of the time scheduling the right ad with the right show.
Of course, some judgement had to be exercised on which serials
would do well. ‘Media innovation was getting into serial produc-
tion,’ says Arpita Menon a former media buyer.50 That is because
DD gave all the commercial time on a show to a sponsor. There-
fore, advertisers preferred to finance the producer and get all the
commercial time on the show.
From 1992 onward, a media planner’s job became more com-
plex. He or she had to juggle a few more channels, with DD and
print vehicles. The whole science of airtime buying and selling
started evolving. Media planners and advertisers began looking
at target audiences, the kind of people who watched a channel
TELEVISION 115
or a programme. They could decide that it made more sense to

advertise a woman’s product during Amaanat on Zee. The im-
age of a channel and that of a programme came into play. Media
planners, who had been starved for options so far, were glad that
there was something to choose from.
Some of the efficiency metrics that evolved over the years that
private television has been in existence are:
Effective Rate
It is calculated by dividing the total money paid by the total
seconds bought on a channel. If the prime time rate on Sony is
`200,000 per 10 seconds and if an advertiser buys 10 spots, that
is `2 million. Assume that he gets two spots free or as a bonus.
That gives him 12 spots for `2 million, taking the effective rate to
`167,000 per 10 seconds. Most buyers usually look at the effec-
tive rate before negotiating.
Cost Per Gross Rating Points (CPGRPs)

The effective rate does not adequately factor in the amount of
reach a channel could give. Reach is measured by the number
of people watching a programme on a channel. If an advertiser
buys time during a programme on Sony, at an effective rate of
`167,000, it could well be a day-time soap that very few people
are watching. To get over that fact, CPGRPs are used. The total
money that might be paid to a channel is divided by the total rat-
ing points on all programmes bought on a channel to arrive at the
CPGRP. If the air time on three programmes can be bought for
`1 million and if the total rating that these three generate is 20,
the cost per rating point works out to `50,000.
However, this method too has its weakness. It cannot take in
adequately the huge difference in impact that advertising on one
show with very high ratings, like KBC, can make. If Sony puts
together a basket of different programmes, with say 4–6 rating
points each, to give an advertiser 20 TVRs at `50,000 each, the
plan looks efficient. However, the advertiser can also get the same
ratings with one high-impact programme. These are the type of
issues planners take into account before making a buying decision.
The Regulations51
The History
The surprising part about regulation in Indian television broad-

casting, frankly, has been its complete absence for a very long time.
There was nothing in the books that said foreign broadcasters could
not send signals from outside Indian soil, though broadcasting was
government controlled. There was nothing that said you could not
hook-up a VCR to a common cable for the entire building. Many
portions of the television broadcast industry have been lucky (or
unlucky, depending on how you view it) to escape regulation. This
has meant growth at a scorching pace, like in cable, without the
trouble of getting licences or permissions. The utter absence of a
regulatory framework has also meant chaos, copyright violation
and the use of the underworld to settle disputes.
The Origins of TV Regulation

The MIB is the apex body for the formulation and administration
of rules, regulations and laws relating to information, broadcast-
ing, films and television. For very long, the Ministry along with
the Indian Telegraph Act of 1885 and The Wireless Telegraphy
Act of 1933 were the two points from which any regulatory indi-
cators came for the broadcasting industry. Government control
over radio and television broadcasting is derived from the Tele-
graph Act where ‘telegraph’ is interpreted to cover the generating
of signals for telecasting.
The Emergency in 1975 created the demand for autonomy. As
a result, a working group was formed to look into autonomy for
AIR and DD, the first attempt at broadcasting reform in India.
The Akash Bharati Bill of 1978, which had lapsed, was re-exam-
ined and presented as the Prasar Bharati Bill in 1989. Although
the Bill was passed in 1990, it was notified only in 1997. Under
the Act, AIR and DD were converted into government corpo-
rations to be overseen by a statutory autonomous authority es-
tablished under the Prasar Bharati (Broadcasting Corporation of
India) Act, 1990. The Prasar Bharati Corporation was envisaged
TELEVISION 117
to be the public service broadcaster of the country, which would

achieve its objectives through AIR and DD.
It was only in the early 1990s, when the Prasar Bharati Bill was
still collecting dust, that there was talk of regulating the cable
industry since there was much litigation surrounding it. This had
to do with copyright, with the right to string wires from one end
of the street to another, and so on. Strangely enough, while the
cable industry was technically still illegal in 1993, the govern-
ment slapped it with an entertainment tax. Some media reports
from the time detail the protests about the tax. However, by 1994,
the cable market had changed from being small entrepreneur-
driven to one where the big players were coming in. That is when
it finally caught the regulator’s eye and was declared as illegal un-
der the Indian Telegraph Act.
Airwaves are Public

The turning point for broadcasting regulation came after a land-
mark judgement by the Supreme Court, which finally lent legiti-
macy to private broadcasters. In the judgement on a suit filed by
the MIB against the Cricket Association of Bengal for the telecast
rights of the Hero Cup 1994, the Supreme Court ruled that the air-
waves are not the monopoly of the Indian government.52 They are
public property and have to be used to foster plurality and diversity
of views, opinions and ideas. This was implicit in Article 19(1)(a)
of the Indian constitution, granting the right of free speech to citi-
zens, said the judgement. Therefore, the supremacy of a few bodies
or individuals to dominate the airwaves can cause the domination
of media and would harm—not serve—the principle of plurality.
The Convergence Bill

It was after this forward-looking judgement that talk veered
around to drafting a Broadcasting Bill. After several drafts and
many delays, the Broadcasting Bill mutated into the Communi-
cations Convergence Bill. It was modelled on the Convergence
Bill of Malaysia and sought to be a master legislation for infor-
mation technology (IT), telecom and media. The Bill addressed
both ‘carriage’ or distribution and ‘content’ or software issues. It
also provided for a super regulator, that is, the Communications

Commission of India (CCI), an FCC kind of body that would
govern IT, telecom and media. The CCI would handle all licencing
and regulatory functions in these three areas. The Bill also pro-
vided for a spectrum management committee, essentially a body
that would allocate frequency for telecom, IT or media purposes.
The formation of a CCI could have been a dramatically for-
ward-looking step. A CCI is the ideal solution in an industry
where technology changes every few months, bringing about
changes in business imperatives. Therefore, having a law that
locks into a certain technology would stunt the industry. The
Digital Millennium Copyright Act of 1998 (DMCA) in the US
was a response to a technology, MP3. Users have moved beyond
MP3 and the law has become largely obsolete. In a convergence
scenario, locking any one part of the IT, telecom or media trio to
any one technology could hamper growth.
However, the Convergence Bill never saw the light of the day.
The example of Prasar Bharati shows that the government still
has a big role in the running of the ‘autonomous body’. Prasar
Bharati relies on budgetary support from the government and
is therefore not really independent. At various forums and even
internally, broadcast industry representatives have expressed
the fear that as with Prasar Bharati, the Communications Com-
mission would not be truly independent. The Convergence Bill,
tabled in Parliament in the last part of 2001, was referred to a
standing committee and finally lapsed.
Acts and Guidelines

It was only post-1994, after the Supreme Court judgement that
the regulation of the business began in earnest.
The Cable Act, 1995

It began with The Cable Television Networks (Regulation) Act,
which came into being in March 1995. Essentially, it regulates
the setting up, content and equipment used by cable television
operators in India. There are provisions making it mandatory for
all cable television operators to register at a cost of `500 with the
TELEVISION 119
postmaster of the local post office. It also put a foreign equity cap
of 49 per cent on cable network companies.
Then came The Cable TV Networks Amendment Bill, 2000.
This made it mandatory to carry three DD channels in the prime
band.53 It also made it the cable operator’s responsibility to ensure
that he does not carry any programme in respect of which copy-
right exists under the Indian Copyright Act without the requisite
licence. This implies, says media lawyer Ashni Parekh, that it is
the cable operator’s responsibility to first get the permission for
retransmission of any programme or film on cable TV.
To this Bill, the government added an amendment in 2002,
making conditional access systems mandatory. The government’s
intention was good, but the amendment was flawed. It was si-
lent on who would bear the cost of the technology and gave the
government too much power to decide what channels will be
watched, where and at what price (see ‘The Past’).
TRAI Becomes Broadcast Regulator, 2004

To deal with the litigation, protest and the mess surrounding
CAS in January 2004, the MIB issued a notification expanding
the scope of the expression ‘telecommunication services’ to in-
clude broadcasting and cable services as well. As a result, TRAI is
now empowered to regulate these services. TRAI can make rec-
ommendations on issues regarding tariffs, interconnect and so
on. It cannot, however, regulate content. Even TRAI could not
do much about the CAS amendment, which collapsed under the
weight of its own contradictions.
TRAI has, however, taken its role of broadcast regulator se-
riously. It has frozen cable rates, then allowed a 7 per cent in-
crease, issued consultation papers and guidelines on everything
from digitisation of cable TV to DTH. For whatever it is worth, it
has thrown up for debate all the issues surrounding distribution
of TV signals, invited everyone for its open house debates and
generally played the regulator’s role with some degree of com-
mon sense. In an industry where there was no regulation to one
where issues of competition, pricing and technology are thrown
up for discussion and where detailed consultation papers have
been issued, this is a long way to have travelled from 1991. (See
the TRAI website for more details.)
Direct-to-home Broadcasting (2001)

Earlier, in 1997, the government had banned the Ku-Band after
Star TV advertised that it was launching a DTH service. In 2001,
it opened it up for broadcasting. However, the policy states that
a broadcasting or cable company cannot own more than 20 per
cent in a DTH venture. The total foreign equity cap in DTH was
49 per cent including FIIs, Overseas Corporate Bodies (OCBs),
NRIs and others.54In 2012, this was increased to 74 per cent. Also,
a DTH operator cannot create exclusive content or programming
and therefore its own channels. It cannot enter into any exclusive
contracts to distribute television channels. The set-top box
that a DTH operator provides to its subscriber must have open
architecture that meets the Bureau of Indian Standard (BIS)
specifications set out in 2003. That means another DTH operator
should be able to offer a service with the same box. There is no
limit on the number of DTH licences that can be issued, each for
a 10-year period.
The Broadcast Bill

Around 2006, renewed efforts were made to draft a Broadcast-
ing Service Regulation Bill which, again, has gone through many
mutations and versions. The government, in its wisdom, has cir-
culated many drafts of the bill to elicit the opinion of the industry
and the public at large in order to work toward a holistic legis-
lation. The Draft Bill of 2006 provides for the establishment of
an independent authority, the Broadcast Regulatory Authority of
India (BRAI), to facilitate and develop in an orderly manner the
carriage and content of broadcasting. It encompasses all forms of
broadcasting including cable, DTH, radio services, satellite radio
and so on.
The Bill seems to place restrictions on cross-media owner-
ship to prevent monopolies. It restricts the shareholding of a
content provider in a broadcaster and vice versa. It suggests caps
on the total number of channels a company can have. The Bill
also imposes public service broadcasting obligations on every
broadcaster. It proposes to repeal the Cable Television Networks
(Regulation) Act, 1995. The bill was not passed by parliament in
2007 and since lapsed.
TELEVISION 121
Guidelines for Uplinking from India

When satellite television came to India, foreign broadcast-
ers were not allowed to uplink from India.55 In June 1998, the
government stated that Indian companies with Indian equity
of not less than 80 per cent and effective management control in
Indian hands were allowed to uplink from India through Videsh
Sanchar Nigam Limited (VSNL).56 For this purpose, they needed
clearance from the MIB. In 1999, the cabinet allowed all Indian
broadcast companies to uplink without making the mandatory
use of VSNL. This was further liberalised in 2000. All broad-
casters, irrespective of their ownership and management, are
allowed to uplink from India. The only caveat is that they have
to adhere to all the other norms, such as the advertising and
broadcasting codes.
In March 2003, these norms were further changed. Any news
and current affairs channel that uplinks out of India cannot have
more than 26 per cent foreign equity or foreign holding of any
kind. The policy also states that any channel that has even a small
component of news will be treated as a news channel and has to
adhere to the guideline. There is no restriction on foreign equity
in production of software, marketing of TV rights, airtime and
advertisements.
The uplinking guidelines were amended in October 2011.
These amendments fell under two heads. Those for the uplinking
of non news/current affairs channels are:
• For the first channel, the minimum net worth of the appli-
cant company has to be `50 million. For every additional
channel, this figure goes up by `25 million.
• The Chairperson or Managing Director or Chief Executive
Officer or Chief Operating Officer or Chief Technical
Officer or Chief Financial Officer of the applicant company
must have not less than three years’ experience in a similar
position in a media company that operates non-news/
non–current affairs channels.
• There is a permission fee of `200,000 per annum for each
non-news/non–current affairs channel.
• The channel must be operationalised within one year of
grant of permission.
Those for the uplinking of news and current affairs channels are:
• For the first channel, the minimum net worth of the ap-
plicant company should by `2 billion. For every additional
channel, the figure rises by `50 million.
must have not less than 3 years’ experience in a similar
position in a media company that operates news/current
affairs channels.
• There is a permission fee of `200,000 per annum for each
news/current affairs channel.
Much of this has been done with a view to dissuading non-

serious players from coming into news broadcasting. There have
been changes in rules also for teleports and hubs.57
Guidelines for Downlinking

In November 2005 the MIB came out with guidelines for downlink-
ing of channels that are uplinked from outside India. In essence,
these make it mandatory for such broadcasters to have companies
registered in India. The idea is to ensure that they are tax-paying
entities that do not repatriate the money they earn in India.
These state that no person/entity shall downlink a channel,
which has not been registered by the MIB under the following
guidelines:
• The entity applying for permission for downlinking a

channel, uplinked from abroad, must be a company reg-
istered in India under the Indian Companies Act, 1956,
irrespective of its equity structure, foreign ownership or
management control.
• The applicant company must have a commercial presence
in India with its principal place of business in India.
• The applicant company must either own the channel it
wants downlinked for public viewing, or must enjoy, for
TELEVISION 123
the territory of India, exclusive marketing/distribution

rights for the same, inclusive of the rights to the advertis-
ing and subscription revenues for the channel and must
submit adequate proof at the time of application.
• In case the applicant company has exclusive marketing/
distribution rights, it should also have the authority to
conclude contracts on behalf of the channel for advertise-
ments, subscription and programme content.
The downlinking guidelines were amended in December 5,

2011. These introduced the following changes. However, do note
that unlike the uplinking guidelines, these do not differentiate
between news/current affairs channels and non-news/non–
current affairs channels. The main changes are:
• The minimum net worth of applicant company, for the

first channel, has to be `50 million. Every additional chan-
nel would need `25 million.
must have not less than 3 years’ experience in a similar
position in a media company that operates news/current
affairs channels or non news/current affairs channels as
the case may be.
• The registration period is 10 years, and with respect to
channels uplinked from India, in tandem with the uplink-
ing permission.
• A permission fee of `500,000 per annum for each non
news/current affairs channel uplinked from India and
`1.5 million per annum for each non news/current affairs
channel uplinked from abroad.
Programme Code
This broadly prohibits the criticism of friendly countries, attack
on religions, communities, anything obscene, defamatory or in-
flammatory, affecting the integrity of the nation and so on.
Advertising Code
It prohibits the advertising of tobacco products including pan
masala and liquor. Ads should also not project a derogatory im-
age of women or endanger the safety of children. The products
and services advertised should be in consonance with the laws
enacted to protect the rights of the consumer. The Cable Act has
a similar advertising and programme code.
Mandatory Programme Sharing

Since the acquisition price for live sports events increased pro-
gressively and exponentially from the 1990s, it became more and
more difficult for the public broadcaster DD to acquire the rights.
Moreover, private media companies all over the world who had
greater financial leverage purchased rights for major sports events
like the Wimbledon Tennis Tournament, the Grand Slam Tennis
Tournaments, the World Cup Cricket Event, the Olympics and so
on, from rights owners for long 5–10 year periods. Issues arose
when cricket matches of great interest, say one between India
and Pakistan were being telecast by private satellite channels and
were available in only the 83 million cable and satellite homes
and not in the 51 million terrestrial homes that get only DD.
As a result of public interest petitions filed before the courts, to
ensure telecast by Doordarshan, issues of dilution of exclusivity
and public interest arose.58 In this context, the government issued
an ordinance to ensure mandatory sharing of signals relating to
specified sports events, which was later promulgated as an Act in
2007. The Act provides that no content rights owner or broad-
caster shall carry a live television broadcast in India of sporting
events of ‘national importance’, unless it simultaneously shares
the live signal, without its advertisements, with Prasar Bharati to
enable them to retransmit on its terrestrial networks and DTH in
such manner and on such terms and conditions as may be speci-
fied. It further provides that the ad revenue sharing between the
rights owner and Prasar Bharati shall be in the ratio of not less
than 75:25 in case of television and 50:50 in case of radio.
The Act mandated that the government would specify the sport-
ing events to which this Act would be applicable. In exercise of
TELEVISION 125
powers under the Act, the MIB issues notifications from time
to time identifying sports events of ‘national importance’ and,
therefore, liable for mandatory sharing. Every content rights
owner intending to carry a live broadcast of a sporting event of
national importance has to inform Prasar Bharati of the same at
least 45 per days prior to the proposed date of telecast and of-
fer to share live signals in a manner and on such terms as speci-
fied. Such mandatory sharing regulations exist in the US, the UK
and other markets. For instance, in Australia, the Broadcasting
Services Act, 1992, empowers the minister to specify an event
through a gazette notification which ought to be made available
to the general public.
However, there is justifiable angst among private broadcasters
about this. Anywhere in the world the exclusive right to telecast
events (like a live sports tournament) on a television channel
is the raison d’être of the existence and sustenance of television
firms. It is the exclusivity of the proprietary rights that deter-
mines the cost of acquiring the broadcasting right and conse-
quently its revenue earning capacity. This ordinance, therefore,
directly affects the revenue earning capacity of private channels.
The Current Status

There are a number of issues and bills being debated within gov-
ernment, TRAI and MIB circles. Some of these are:
Content Regulation
Content in any form of the media including broadcasting is subject
to restrictions which are reasonable given the fundamental right to
free speech guaranteed under Article 19(1)(A) of the Constitution
of India. Some of these restrictions have been either made part of
legislations over a period of time or have been introduced as codes
and guidelines by the government. Some of these restrictions im-
posed either through statute, codes or self regulation are:
1. The Indecent Representation of Women (Prohibition)

Act, 1986.
2. The Young Persons (Harmful Publications) Act, 1956.
3. The Indian Penal Code, 1860.

4. The Emblem and Names (Prevention of Improper Use)
Act, 1950.
5. The Drugs and Magic Remedies (Objectionable Adver-
tisement) Act, 1954.
6. The Pre-Natal Diagnostic Techniques (Regulation and
Prevention of Misuse) Act, 1994.
7. The Transplantation of Human Organ Act, 1994.
8. The Drugs and Cosmetics Act, 1940.
9. The Prize Competition Act, 1955.
10. The Prize Chits and Money Circulation Schemes (Banning)
Act, 1978.
11. The Cigarettes and other Tobacco Products (Prohibition
of Advertisement and Regulation of Trade and Com-
merce, Production, Supply and Distribution) Act, 2003.
12. The Representation of People Act, 1951.
13. The Cable Television Networks (Regulation) Act, 1995,
which further prescribes the Programme Code and the
Advertisement Code.
14. The Cinematographic Act, 1952.
15. Code for Commercial Advertising on DD.
16. Code for Self Regulation in Advertising adopted by the
Advertising Standards Council of India (ASCI).
17. Guidelines on the Coverage of Elections by Akashvani
and DD.
18. Guidelines for coverage of Parliamentary Proceedings by
AIR and DD.
19. The Press Council of India’s Norms of Journalistic Conduct.
20. The Voluntary and Self Regulatory Code adopted by the
Tobacco Institute of India for marketing of tobacco prod-
ucts in India.
21. The Confederation of Indian Alcoholic Beverage Com-
panies or CIABC Code of Practice for the marketing of
alcoholic beverages in India.
In spite of the presence of all these Acts, the government had

been debating the appointment of a content regulator. This is be-
cause there have been complaints—and at least one instance of
a public interest litigation (PIL) being filed—against obscene
TELEVISION 127
content on television. Finally in 2007, under pressure from PILs

and a shrill debate on falling standards on news channels, the
government floated a draft content code. That is when broadcast-
ers got their act together to create a set of guidelines under the
aegis of the IBF and the NBA. These are not law, but act as a
mechanism that forces broadcasters to police one another. As a
result, the quality of reportage on news channels has improved
somewhat since 2008. The Self Regulation Guidelines for the
Broadcasting Sector, 2008, are available on the website of the
MIB as also on the NBA and IBF websites.59
In addition to this in a notification of March 2013, TRAI has
sought to enforce some of the existing norms within the adver-
tising code and the Cable Act, on advertising time on television
channels. These are:
• The picture and the audible matter of the advertisement

shall not be excessively ‘loud’.
• All advertisements should be clearly distinguishable from
the programme and should not in any manner interfere
with the programme. This refers specifically to the use
of the lower part of the screen to carry captions, static or
moving alongside the programme.
• No programme shall carry advertisements exceeding 12
minutes per hour, which may include up to 10 minutes per
hour of commercial advertisements, and up to 2 minutes
per hour of a channel’s self-promotional programmes.
Piracy
Any programme broadcast has essentially two elements to it—the
content and the broadcast itself. While the creator of the content
owns the copyright in the content either by original ownership
or by licence or assignment from the original owner, the right in
the broadcast is with the broadcasting organisation. This special
right of a broadcaster is known as Broadcast Reproduction Right
and subsists until 25 years from the beginning of the calendar
year following the year in which the broadcast is made. No per-
son without a licence from the broadcaster can re-broadcast or
make any recording of the broadcast and so on.
The Copyright Act lists out situations in which this broadcast

right would not be deemed to be infringed. These are if it is used
solely for purposes of bona fide teaching or research, private use
of the person recording it and most importantly, use that is con-
sistent with ‘fair dealing’: for instance, the use of excerpts of a
broadcast in the reporting of current events. This latter exception
of use of excerpts for news reporting has erupted into a major
controversy in the last few years and has become a bone of con-
tention between broadcasters of live sports events or high view-
ership programmes on one hand and news channels on the other
hand. This is more popularly called ‘illegal use of footage’ which
has become rampant since there is no existing definition of what
would amount to ‘fair dealing’.
Some disputes have reached the courts, but no decision ex-
ists till date on the limits or restrictions which can be imposed
on news channels, that is, in terms of the length of the excerpts
utilised, the number of times it is repeated and to what extent it
can be commercially exploited.60 The other issues which arise as
regards illegal usage is in situations of ‘over-spill’ of the broad-
cast beyond the boundaries of India and its illegal downlinking
as also the broadcast by cable operators on their local channels of
unlicenced content, particularly films. While overspill issues are
dealt with under contractual relationship of the parties, piracy by
cable operators can be tackled under the Cable Act of 1995.
The New Distribution Platforms

There has been some thinking on the new distribution technolo-
gies and TRAI has come up with specific recommendations for
most. Some of these are:
IPTV TRAI submitted its recommendations on IPTV

in January 2008. The recommendations envisage that tel-
ecom companies, ISPs and cable operators can provide
IPTV service without getting a new licence or getting reg-
istered afresh. The service provider would have to pay the
licence fee on IPTV revenue in addition to its telecom/
ISP licence. It was further recommended in June 2008
that there should be a non-discriminatory price regime
TELEVISION 129
for the composition of bouquets and pricing of channels

for IPTV services at par with that offered to DTH ser-
vice providers. The idea of the regulator is to move to a
uniform pricing regime for different addressable deliv-
ery platforms. There were issues of regulation of content
on IPTV since it does not fall within the Cable Act and
the telecom licences do not have content restrictions. It
was therefore suggested by some that only broadcasters
bound by uplinking/downlinking guidelines should be
providing content for IPTV.
The MIB has amended the Downlinking Guidelines,
through a notification in September 2008, to enable IPTV
service permitted to provide such services as per their tele-
com licences. The MIB also issued policy guidelines for the
provision of IPTV services in India, which permit licenced
telecom service providers and ISPs, having a net worth in
excess of `1 billion, to provide IPTV services. These guide-
lines also set out the terms of payment of licence fees for
provision of IPTV, the requirement of compliance with
the Programme and Advertisement Code and the ability
of the ministry to prescribe certain must-carry channels
and mandate that the signals for provision of IPTV must
be sourced directly from a broadcaster alone and not an
MSO or other intermediary organisation.
Headend in the sky or HITS This is a satellite-based de-
livery platform for delivering multi-channel television sig-
nals to cable operators across the country, in digital form.
The HITS operator uplinks signals of different broadcast-
ers to the HITS satellite in the sky. Cable operators then
downlink these channels from across the country without
the need for an MSO. The TRAI released a consultation
paper in July 2007 on HITS. In 2009 the MIB formulated
and issued policy guidelines for providing HITs. The key
provisions of the policy guidelines are:
• The applicant company must be an Indian Company,
with a net worth of at least `100 million.
• The permission issuable to such company will be for a
period of 10 years from the date of issue of the wireless
operational licence.
• The application fee is `100 million, with no annual fee

although the licensee fee for the wireless operational
licence would be due and payable.
• The key managerial personnel of the company would
have to be security cleared by the MIB.
• The permission-holding company must not carry any
channels that are prohibited by the ministry, and must
ensure compliance with the Programme and Adver-
tisement Codes.
• The permission-holding company must provide ac-
cess to content on a non-discriminatory basis and
must not enter into an exclusive distribution agree-
ment with any TV channel.
• The Government, MIB or any authorised representa-
tive is entitled to inspect the equipment and facilities
of the permission-holder and monitor its conduct.
Mobile television TRAI recommends that there should
be a new class of service providers for provision of mobile
television services using broadcasting technologies. The
existing telecom operators having CMTS or UASL licenc-
es would not require any further licence or permission for
offering mobile television services on their own network
using their own spectrum.61 The licences have been rec-
ommended for a period of 10 years on a licence fee basis.
FDI up to 74 per cent is now permitted in mobile TV.
The Digitisation Law

In 2011, the Cable Act of 1995 was amended. The effect is that
digital addressable systems (such as conditional access systems)
are required to access both free-to-air channels or pay-to-view
channels, in contrast to the Amendment Act of 2003 which re-
quired that CAS systems would be mandatorily required to ac-
cess only pay channels. The amendment also expressly designates
and defines TRAI as the appropriate authority for the regulation
of cable network broadcasting in India. The changes also enable
licenced cable operators to lay cables and other infrastructure
under or over immovable property owned or controlled by pub-
lic authorities, and facilitates the grant of way by such public
authorities to cable operators for this purpose.
TELEVISION 131
FDI Limits
In 2012, the MIB finally moved to relax FDI limits on DTH, ca-
ble, mobile TV and teleports to 74 per cent from the earlier 49
per cent. It has not increased the FDI limits on MSOs, which con-
tinue to be 49 per cent.
The Valuation Norms

The Variables
Value in the television business is derived from ‘content or dis-
tributionassets’. That is jargon for the programmes that are made
and shown on television and the ownership of networks that have
last mile control over your home. Last mile control usually im-
plies control over the consumer and the actual cash collected.
In television broadcasting parlance, both content and own-
ership of last mile are assets, just like plant and machinery in
manufacturing. This is because a show can be used to generate
revenues in the future throughre-telecast, syndication, dubbing
and so on. Similarly, control over 10 million cable homes or five
million DTH homes means steady annuityrevenues.
Some of the variables that determine valuation are:
The Point in the Value Chain

How an investor views a company in the television business de-
pends to a great extent on where in the value chain it is placed.
These three points are:
Software or content How this would be valued depends to
some extent on whether you are a broadcaster or a software
producer.
If Zee TV was to place equity with private investors or list a
proportion of its shares, one of the first things investment bank-
ers would look at are its library and the equity of its channels
among viewers. The valuation of the library is a fairly easy busi-
ness. Take, for example, Saat Phere, a popular soap on Zee TV.
Now, assume that Zee was to run it again in India, after three
years. If Saat Phere got a TVR of five, three years later it could
perhaps fetch a TVR of four. At that level of rating, what revenues
could Zee generate based on future ad rates multiplied by ad-
vertising seconds that it could sell on Saat Phere? Any potential
revenues that Saat Phere could get from airing on Zee TV UK or
US, or any of its other international channels or from dubbing
or syndication rights, are added. The total is then discounted for
inflation and the cash flows add-up over the period that the serial
will be aired.
Saat Phere is a soap opera, or a long running continuous story.
It has the potential to be re-aired. There are other genres of pro-
gramming that may or may not have similar value. A talk show
like Koffee with Karan or a sitcom (situational comedy) such as
Sarabhai v/s Sarabhai, either of which the viewer can sample
without being involved with the story, has less value after three
years because it is topical by nature. These, incidentally, are also
less expensive to produce.
A feature film, on the other hand, has a lot of value, especially if
it has been a hit. That explains why broadcasters pay good money
to get the satellite broadcast rights of films under production. On
the other hand news programming has, arguably, the least value.
That is because except for historical purposes or some syndica-
tion of the footage for documentaries, it has little re-run value.
So, the total number of programming hours that a broadcaster
has is of little relevance. It is the composition of the total hours,
by genre that is more important.
Again, within each genre, the judgement of what will click
is also one that cannot be taken easily. For example, Kyunkii…
was an extremely popular soap that ran for eight years. But
what can one make of its re-run potential five or 10 years later?
Audience tastes may have changed by then. Alternatively, it
may find a huge following with the starved-for-Indian-culture
overseas audience.
If Balaji Telefilms were to value its library, the exercise would
be similar. The only difference is that unlike Zee, Balaji does not
have its own channel. Also, it does not own everything that it
makes. Most of its shows are commissioned by broadcasters who
then own all the rights. For this, Balaji will be valued on its ability
to deliver hits. On the other hand there are some shows, which
it may sell to Sun TV or DD channels that work on the telecast
TELEVISION 133
fee model. The rights to these shows revert back to Balaji. On

these, Balaji will be valued based on their potential for re-selling
to other channels, overseas or syndication.
Distribution Globally, distribution is valued in terms of per
subscriber or per household. There are two things that are taken
into consideration. First is the revenue and profit that a network
is generating per subscriber. Second, its potential to increase that
number. This is calculated by looking at the cost of upgrading
a network, say Hathway or WWIL, and the improved cash flow
this would generate.
Integration While some companies may be pure broadcasters,
content companies or distribution companies, many have a fin-
ger in more than one pie. In such a case, the company is likely
to be valued better assuming it manages to leverage the fact that
it exists across the chain. In India, it is rare for broadcasters to
own content companies, since outsourcing is cheaper. However,
distribution, where a better control over pay revenues is possible,
is an area almost every major broadcaster is in. Through parent
Essel Group, Zee owns WWIL, a cable network, and the Dish
TV DTH network. It is also planning to invest in HITs. Sun has
Sumangali cable and now a DTH network.
Market Share
Just like in all media businesses, the position of a broadcaster,
content company or distributor in the market is critical. Those
occupying the number one and two positions will always do bet-
ter. A broadcaster with at least one or two channels with large
viewership and therefore advertising, commands a better valu-
ation even if its other channels are laggards. This is because the
popular channels and shows make it easier to command better
rates, distribution and returns for the others too.
Management
The management structure, corporate governance, brand
equity and the likes are also taken into account as for any other
company.
Market Size and Growth Rate

This is one variable on which Indian companies always rate
better. At 153 million TV homes, India is the second largest
TV market in the world. In revenues terms too it is growing in
double digits compared to other developing and mature markets.
As a result it has attracted over the last decade or so every major
broadcaster in the world—from Disney to Turner to NBC. All of
them are looking for growth as their home market, the US, sees
drops in TV viewership and penetration.
Table 2.1 The Growth of TV Broadcasting in India—The Basic Numbers
C&S DTH Revenue Streams (` Million)

Total TV homes homes Cable/local Total Revenues
Year homes (million) (million) Advertising advertising Subscription (` million)
1959 0.000021 none none none NA none na
1969 0.012303 none none none NA none na
1979 1.1 none none 61.6 NA none 61.6
1989 22.5 none none 1612.6 NA none 1612.6
1992 34.9 1.2 none 3950 NA 1008 4958
1993 40.3 3 none 4960 NA 2520 7480
1994 45.7 11.8 none 8480 NA 9912 18392
1995 52.3 15 none 13450 NA 18000 31450
1996 57.7 18 none 19750 NA 21600 41350
1997 63.2 na none 25840 NA na na
1998 69.1 29 none 33670 NA 34800 68470
2000 40 33 none 44390 NA 39600 83990
2001 79 40 none 47,940 NA 48000 95,940
2002 81.57 40.49 none 47170 NA 48588 95758
2003 na 49 na 50940 5000 88200 144140
2004 100 55 na 58020 5500 99000 162520
2005 108 61 3.75 67460 6050 111600 185110
(Table 2.1 Contd.)

(Table 2.1 Contd.)
C&S DTH Revenue Streams (` Million)

Total TV homes homes Cable/local Total Revenues
Year homes (million) (million) Advertising advertising Subscription (` million)
2006 112 68 5.2 60500 6655 131760 198915
2007 117 72 8 71100 7320 144000 222420
2008 123 83 15 82000 8052 167400 249400
2009 123 91 20 88000 8857 199800 296657
2010 134 103 24 103000 9742 228600 341342
2011 141 116 40 116000 9742 253800 379542
2012 148 120 51 124800 9742 266400 400942
Sources: Doordarshan annual reports, Ministry of information and broadcasting releases, NRS, Satellite and Cable TV Magazine,
Lodestar Media (now Lodestar Universal), TAM Media Research, TRAI, Zenith Optimedia and industry estimates.
Note: 1) The pay revenues from cable in the initial years are impossible to determine since there are no estimates of how many households
were connected. From 1992-94 cable revenues are calculated at `70 per connected household per month. From 1995-2002, they are
calculated at `100 per home per month and from thereon at `150. 2) From 2011 onwards since the gap between only DD homes which
do not pay anything and Cable & Satellite and DTH homes is very low, all TV homes are considered pay homes for the sake of calculating
subscription revenues. 3) To the advertising revenues I have added, from 2003 onwards, cable advertising revenues of `5 billion assuming a
10 per cent increase every year. These are assumed to have stagnated post 2010 when DTH truly took off. 4) The figures for DTH homes do
not include DD Direct, DD’s free-to-air service. 5) The average subscription for DTH operators per subscriber is also taken `150 though the
actual ARPU varies from `80-130. 6) Till 2005 the ad revenue figures are from Lodestar Media (now Lodestar Universal), post that the source
is FICCI-KPMG Reports.
na: not available.
Data compiled and analysed by Vanita Kohli-Khandekar. This data may be reproduced only with due credit to either The Indian Media
Business or Vanita Kohli-Khandekar.
Table 2.2 The Television Business—India and the World—A Snapshot
2012 India China HK Korea Brazil UK US Russia

Households (mil.) 254.7 442.7 2.6 19.0 56.0 25.9 118.6 57.4
Total TV Homes (mil.) 154.9 430.5 2.6 18.9 53.3 25.8 114.4 54.3
TV Pen./HH (%) 60.8% 97.2% 99.5% 99.7% 95.2% 99.6% 96.5% 94.6%
Fixed BB Pen./HH (%) 5.7% 40.8% 92.3% 99.1% 16.5% 60.1% 64.4% 13.4%
Pay – TV Subs (mil.) 128.2 232.8 2.5 25.2 7.6 12.2 101.1 16.3
Cable (mil.) 95.7 209.8 1.1 14.9 4.3 3.3 57.7 13.3
DTH (mil.) 32.4 – 0.04 3.8 3.3 8.8 34.0 1.9
IPTV (mil.) – 23.0 1.4 6.5 – 0.1 9.5 1.1
Pay – TV Pen./TVHH (%) 82.7% 54.1% 97.7% 133.3% 14.3% 47.3% 88.4% 30.0%
Digital Pay – TV Subs (mil.) 43.5 160.7 2.5 15.5 4.5 12.2 77.0 6.5
Cable (mil.) 14.6 137.7 1.1 5.2 1.2 3.3 43.0 3.5
DTH (mil.) 32.4 – 0.0 3.8 3.3 8.8 32.0 1.9
IPTV (mil.) – 23.0 1.4 6.5 – 0.1 2.0 1.1
Total Digital Subs (mil.) 57.0 226.6 4.4 15.5 4.5 38.0 191.4 7.7
(Table 2.2 Contd.)

(Table 2.2 Contd.)
2012 India China HK Korea Brazil UK US Russia
Pay (mil.) 43.5 160.7 2.5 15.5 4.5 12.2 77.0 6.5
Free (DTT) (mil.) 13.5 65.9 1.9 – – 25.8 114.4 1.2
Digital Subs/TVHH (%) 36.8% 52.6% 171.5% 82.0% 8.4% 147.2% 167.3% 14.2%
Pay – TV ARPU/month (US$) 3.4 4.2 18.8 8.2 4.4 65.5 73.8 6.3
TV Advertising (FTA, Pay – TV) (US$ mil.) 2,777 11,238 466 3,035 12,926 5,222 62,129 4,820
Source: Media Partners Asia.

Note: 1) IPTV in Korea primarily consists of voice-on-demand VOD services from KT’s MegaTV and SK Broadband’s HanaTV. 2) HH is Households, ARPU
is Average Revenue Per User, DTH is direct-to-home and IPTV is Internet Protocol Television. 3) FTA is Free-to-air television, DTT is Digital Terrestrial
Transmission.
Table 2.3 The Growth of Indian TV Broadcasting—The Programming Genres
Year
Programming genre (%) 2004 2005 2006 2007 2008 2009 2010 2011 2012
Business News 0.1 0.4 0.5 0.5 0.5 0.2 0.2 0.1 0.1
Cable 11.4 10.6 9.9 10.6 8.7 7.8 – – –
English Entertainment 0.7 0.5 0.4 0.3 0.2 0.2 0.1 0.2 0.2
English Movies 1.4 1.1 1.0 1.0 0.8 0.8 0.7 1.0 1.0
English News 0.3 0.3 0.5 0.7 0.6 0.4 0.3 0.3 0.2
Hindi GEC 24.2 23.6 23.0 22.6 23.2 23.0 26.4 25.5 29.1
Hindi Movies 10.0 9.9 10.5 10.5 11.6 6.5 6.9 7.6 9.0
Hindi News 3.7 4.2 4.5 4.8 4.8 3.6 3.4 3.8 3.2
Infotainment 1.2 1.0 1.0 1.0 0.8 0.9 1.0 1.0 1.2
Kids 2.7 4.0 5.8 5.9 5.4 5.5 5.9 6.2 7.0
Music 1.7 1.6 1.8 2.1 2.5 2.1 2.4 3.0 3.4
Others 1.4 0.7 0.6 1.0 0.5 13.2 18.7 16.3 14.1
Regional GEC 28.8 28.0 26.6 25.6 24.8 23.3 22.1 22.1 21.2
(Table 2.3 Contd.)

(Table 2.3 Contd.)
Year
Programming genre (%) 2004 2005 2006 2007 2008 2009 2010 2011 2012
Regional Movies 4.6 5.4 5.2 4.7 4.6 5.1 4.7 4.2 4.0
Regional Music 1.0 2.4 2.6 2.5 2.1 1.8 1.7 1.7 1.8
Regional News 1.2 1.5 1.7 2.4 2.7 3.7 3.5 3.8 3.4
Religious 0.7 0.9 0.8 0.9 0.8 0.2 0.2 0.2 0.2
Sports 4.8 3.9 3.8 3.2 3.3 2.0 1.8 3.0 2.1
Source: TAM Media Research.

Note: 1) The genre shares indicated here above are simple approximates. The reason being that there could have been re-categorisation of specific
TV Channels under newer/different genres given their change of focus in programming/content.
2) The figures are the percentage share of the genres listed in TV viewing in cable and satellite homes, all India, in the target group of four years plus.
TELEVISION 141
Table 2.4a The Top Advertisers on Television—Product Categories
Top 10 Super Categories in 2010 on TV

2 Personal Care/Personal Hygiene 13
3 Services 6
4 Hair Care 5
6 Telecom/Internet Service Providers 4
7 Auto 4
9 Household Products 3
The top 10 Super Categories in 2011 on TV
3 Services 7
4 Hair Care 5
6 Auto 4
Top 10 Super Categories in 2012 on TV
3 Services 7
(Table 2.4a Contd.)

(Table 2.4a Contd.)

5 Hair Care 5
6 Auto 4
9 Building, Industrial & Land Materials/Equipments 3
Source : Adex India, a division of TAM Media Research.

in seconds of advertising.
Table 2.4b The Top Advertisers on Television—Companies
Top 10 Advertisers in 2010 on TV

2 Reckitt Benckiser (India) Ltd 3
3 Cadburys India Ltd 2
4 ITC 2
5 Procter & Gamble 2
6 Coca Cola India Ltd 2
7 Colgate Palmolive India Ltd 1
8 Ponds India 1
9 L O'real India Pvt Ltd 1
10 Smith Kline Beecham 1
(Table 2.4b Contd.)

TELEVISION 143
(Table 2.4b Contd.)

4 ITC 2
6 Ponds India 1
9 Bharti Airtel Ltd 1
10 Smith Kline Beecham 1
4 ITC 2
7 Ponds India 1
10 Marico Ltd 1
Source: Adex India is a division of TAM Media Research.

Caselet 2a Everything You Wanted to Know About

Digitisation
What is Digitisation?
Digitisation essentially means that the capacity of your TV to
get more channels goes up. There are two ways you get your
TV signals currently—via cable and DTH. Digitisation broad-
ens the cable pipe, adding 10 times as much capacity. DTH is
born digital in India. So any discussion about mandatory dig-
itisation is only about moving cable from analogue to digital.
Why is There Such a Fuss About it?

To really understand the fuss around it and the monumental
impact it will have on this business, here is a quick recap.
Television signals are delivered, largely, through cable
pipes. Just like most TV sets across the world, Indian ones
can take only analog signals. And just like TV transmission
systems across the world, we have a last mile that is analog.
Therefore, a typical TV can only take a maximum of 106
channels. Till about 10 years ago, there were only about a
100 channels. By 2005, however, this figure rose to 160. This
is besides the hundreds of local cable channels, like CCC
from Hathway or CVO from InCable that you get from your
MSO and local cable operator (LCO). By 2012, this figure
had gone to over 800 channels. This put tremendous pres-
sure on cable companies. While they can deliver so many
channels, the Indian television universe is not geared to take
them. This capacity constraint created the carriage fee phe-
nomenon. Cable companies and operators routinely charge a
hefty fee to carry channels, especially smaller and new ones.
This meant two things. One, you were being denied variety
as a viewer. Two, broadcasters were not making much mon-
ey from subscription, though the average consumer payout
is `150–200 per month. This makes them overdependent on
(Caselet Contd.)
TELEVISION 145
(Caselet Contd.)
advertising. This in turn meant that programming innova-

tion went out of the window.
You need to broaden the pipe that gets TV signals into
your home. Digitisation does that by compressing signals.
Roughly for every analogue channel, you could carry 10
digital ones. So capacity goes up by 10 times if you digitise.
How is it Done?
By attaching a digital set-top box to the TV and transmitting
signals through that. It increases the capacity of your TV to
take signals. But this means that the transmission has to be
digital and there has to be subscriber management software
in place with the cable operator and distributor to track what
you buy. Think of it as an electricity meter. It will meter your
television, track what you buy and bill you accordingly.
Why didn’t it Happen Earlier?

It involves a huge amount of investment. One estimate puts
the cost at `3,000 per subscriber or `300 billion for 100
million cable only homes. Because ownership of the last mile,
as you read in the chapter, has never been clear, nobody wants
to invest. Also, digitisation forces transparency. Because all
TV homes can be tracked, everyone—broadcasters, cable
operators and MSOs or signal distributors—have to come
clean on revenues, taxes, viewership numbers, everything.
This was something large parts of the industry resisted.
Broadcasters did not want to lose advertising revenues
because digitisation would show their true reach. MSOs did
not want to lose carriage fees which were born out of capacity
constraints. And cable operators wanted the freedom to keep
a bulk of the money, passing on only 20 per cent or so to the
broadcasters and distributors. Even at the current revenue
(Caselet Contd.)
(Caselet Contd.)
level, more than `100 billion could come into the system if
all TV homes in India became digital.
Why is it Happening Now?

In 2003, DTH operators started selling Digital TV signals
and boxes. Currently, India has over 51 million DTH sub-
scribers. All of these are, as mentioned earlier, born digital.
These have, largely, no bandwidth issues62. Channels are
packaged and billing happens through prepaid.
The success of DTH and the fact that it took viewers away
from cable created enough support for cable digitisation.
After two unsuccessful attempts, the government finally
mandated digitisation with an amendment to the Cable Act
in 2011. The all-India deadline is December 2014. At the
time of going to press three of the four metros – Mumbai,
Delhi and Kolkata – were fully digital. Chennai and 38 other
cities were still going through the steps, with some delays.
What are the Implications of Digitisation

per se?
DTH operators have blown up over $4 billion on setting up
digital networks. Most are yet to make money. This tells you
that there is some logic to doing this whether or not there is
a mandate. Ideally the cable industry should not have waited
for a government mandate. There are four reasons digitisation
is the best thing to have happened to the Indian TV industry.
One, it brings 100 per cent transparency to the system.
This means more pay revenues. This is evident in the fact
that broadcasters already get a higher share of pay revenues
from the 51 million DTH homes rather than the 100 million
cable homes (see Table 2.1) This is because every DTH
home is accounted for. Imagine a scenario where all the 153
(Caselet Contd.)
TELEVISION 147
(Caselet Contd.)
million TV-owning homes are digital. Once a fair share of

revenue from those comes in, broadcasters can become less
dependent on advertising. Also, as capacity constraints ease
off, there is no reason for MSOs to charge carriage fees. This
means lower costs and, therefore, better margins.
Two, it will bring programming back into focus. The in-
creased cash flows have to go into better programming. The
next round of growth will come from that. It is the ability
to craft, package and sell the most interesting channels and
programming that will help broadcasters make a winning
pitch for viewers’ wallets. By removing bandwidth short-
ages from the equation, digitisation changes the nature of
the broadcasting game—from an eyeball-driven, advertiser-
centric one to a pay-driven, consumer-centric one.
What Does Digital Do to Viewing Behaviour?63

Going by TAM data on viewing patterns within existing dig-
ital homes three things are evident.
One, sampling has increased. This in turn has led to an in-
crease in time spent and reach for several genres. There has
been, for instance, a 79 per cent jump in sampling for English
entertainment in Delhi. This is because of availability and
easier navigation. Since there are no capacity constraints, all
channels are available to anyone wanting to watch them in
digital homes. For instance, Discovery Network’s channels
now rate higher in the digital universe than the analogue
one, because the availability is higher in digital. Add to this
the electronic programming guide or EPG which improves a
viewer’s ability to navigate within a genre or between genres.
This has also led to increased sampling.
Two, differentiation becomes critical. ‘Even as stickiness
(or time spent) increases, content that is commoditised in
nature will lose’, says L.V Krishnan, CEO, TAM Media Re-
search. This means that news, music, or any category with
(Caselet Contd.)
(Caselet Contd.)
low or no differentiation will be hit first. Take news for

instance. You could get it anywhere—in newspapers, on-
line or on free-to-air TV channels. You would subscribe
to a news channel only if there was something exceptional
about it.
Three, digitisation helps increase the ‘long tail’ of content
either by shifting the place or the time of consumption. It
allows broadcasters to reach out to new markets or smaller
clusters of audiences profitably. The sampling of Tamil films
and general entertainment channels (GECs) went up by a
whopping 76 per cent in Delhi, considered a ‘Hindi’ market.
The possible reason? Delhi gets the highest flow of migrants
from all over the country. There must be, within the city,
sizeable chunks of Tamilians devouring what operators such
as Airtel, with its 27 Tamil channels (among others), offer.
What are the Implications of Changes in

Viewing Patterns in Digital Homes?
‘The people who do not invest in content will be decimated’,
says Sanjay Gupta, COO, Star India. Star has been spending
heavily on movies, dramas and chat shows such as Satyamev
Jayate. In 2012, it paid a whopping `38 billion for cricket
rights from BCCI. In the same year its Channel V morphed
from being a music channel to a youth one. The reason: digi-
tal homes show a clear skew towards youth programming,
just one of the niches that data is throwing up.
Also, ‘We see a lot more shows being commissioned by
niche channels’, says Anupama Mandloi, content head,
Fremantle Media India, the producers of India’s Got Talent
and Indian Idol, among other shows. Besides identifying and
investing in content, packaging and pricing too will become
critical. Someone in Nagpur may want two Malayalam
channels and the system should be flexible enough to give
those. In the analogue mode it wasn’t. In digital, it is because
(Caselet Contd.)
TELEVISION 149
(Caselet Contd.)
of all the backend investments in call centres and subscriber

management software. ‘The ability to handle customer
preference at single channel level is the biggest advantage
we (DTH operators) have’, says Shashi Arora, CEO, DTH
and media, Bharti Airtel. Remember that in telecom, the
soft drink marketers were hired in the last decade simply
because they knew how to package and price telecom into
smaller bits. That is what will happen in TV where a strong
line-up of FMCG executives has been hired.
Many years ago, multiplexes brought the ability to slice
and dice audiences by price, time, show timings and gen-
res. This helped improve ticket prices and, therefore, reali-
sations from theatres. In the last decade, growth has come
from computerised multiplexes, so transparency is a given.
All of this put together has unleashed the creative potential
of the Indian film industry, leading it to grow by over eight
times in a decade. This is what will happen to television once
digitisation is complete. The multiplexing of TV has begun.
Caselet 2b How to Fix the News Broadcasting Business
It is not too difficult to understand what is wrong with the

news business in India. What is difficult is figuring out how
to fix it.64
TAM Media Research tracks 105 news channels in the
country. But the total news channels available are over 135
according to estimates. This is the highest number of news
channels anywhere in the world. They are fighting over an
ad pie that has held stagnant at `18–`20 billion for sever-
al years now. The overall viewership of news has stagnated
between 7–8 per cent of total TV viewing in the last three
years. Of the five listed TV news companies only three—TV
Today, Zee News and Network18—have managed to scrape
(Caselet Contd.)
(Caselet Contd.)
a profit out of the business in the year ending March 2012.

Most of the unlisted ones, except perhaps for MCCS (which
owns ABP News and other channels) are making a loss.
A cursory analysis of the list of 135 channels shows that
roughly one-third are owned by companies or individuals not
interested in building a news brand. ‘Many of the regional
channels are just political vehicles’, says one industry insider.
Many of the new players have come into the market because
they want to use a news channel as a tool of influence, favour
or threat. These could be builders, politicians or even large
companies from other industries. As a result, the companies
that want to make money end up competing with ones that
have money to burn and no shareholder questions to answer.
Many of the non-serious firms refuse to become members
of the NBA. That would force them to adhere to the con-
tent code. As competition in every language increases, the
fight for ad revenues, the mainstay of the business goes up.
This race for eyeballs has encouraged a race to the bottom
on quality and standards. That explains why news channels
have become an object of ridicule, hate and pity at times. As
one broadcaster puts it, ‘When our whole business model is
predicated on killing out main product—the content—every
night, how will we survive?’
There are two things that could help lift this market out of
the muck it is in.
One, if digitisation takes off. As discussed in Caselet 2a,
digitisation will force commoditised content out. So, all the
channels that only occupy space on your TV will go as con-
sumers choose what they want to watch. The only reason a
consumer would pay to watch a news channels in a com-
pletely digital world is because it offers something special,
something differentiated. Of course, many could stay free-
to-air, like they are right now.
Two, if Doordarshan gets its act together. Globally, a
strong news brand needs huge amounts of, usually unprofit-
able, investment into content. The best way you can generate
(Caselet Contd.)
TELEVISION 151
(Caselet Contd.)
good credible news is through an independent editorial body

that has no revenue pressure. The BBC is one such brand.
It uses the British taxpayer’s money to great effect to create
one of the best news brands in the world. This has forced
private broadcasters to maintain a certain level of quality.
DD, which is subsidised to the tune of `19 odd billion every
year, would do the nation a huge service if it simply became
a good, independent news channel funded by Indian taxpay-
ers. That will force the others to clean up their act.
Caselet 2c Television and the Online World—The American

Story*
The Internet has already charmed its way and disrupted

the music, newspaper and the publishing industry. Now it’s
slowly finding its ground in the television industry. Con-
tent aggregators like Netflix, Hulu plus and Amazon Instant
Prime Video offer content that users can watch anywhere,
anytime on a host of devices like their smartphones, tablets
and computers, thus fundamentally altering TV viewing
habits that have been prevalent for decades. This has great
implications for the future of all the stakeholders in the in-
dustry—the players, the advertisers and consumers.
On the face of it, if we look at the numbers, it would seem
like there is nothing major for the television industry to
worry about. At least not for a few more years. According
to a study done by Nielsen, in the last quarter of 2012, an
American spent an average of 33 hours a week watching tel-
evision. This is about half a per cent less than the time he
spent watching television in the last quarter of 2010.
A little under 5 per cent of American households are
classified by Nielsen as ‘Zero TV households’ or households
that don’t watch traditional television but only stream videos
online using different subscriptions across multiple devices.
(Caselet Contd.)
(Caselet Contd.)
This number has grown from 2 million homes in 2007 to 5.1

million homes in 2013. Though this category of consumers,
labelled as ‘cord cutters’, is continuously increasing, the figure
of 5.1 million (number of homes only with a broadband
connection) seems a lot lesser as compared to the 80. 8 million
homes that have both cable and broadband connections and
even the 22.3 million homes that only have a cable connection.
The networks don’t seem to be very concerned about these
Zero TV households yet.
HBO’s Chief executive Bill Nelson says in an article in The
Economist, ‘There are roughly 105 million multichannel TV
households in America, of which 77 million do not subscribe
to HBO. By contrast, there are only about 3 million house-
holds with broadband connections and reasonable amounts of
money but no multichannel TV. It makes sense to go after the
bigger group. ...Let’s assume that in ten years’ time there has
been a significant shift away from multichannel subscriptions,
in that environment, HBO may reconsider its position.’ 65
Does the television industry really have reasons to worry?
Here are some indicators.
In the current environment, it is much cheaper to only
have a broadband connection and subscribe to content ag-
gregators like Netflix, Hulu Plus or Amazon Prime (Sub-
scriptions cost less than $10 dollars a month) or pay the likes
of iTunes and Amazon instant video to watch an episode
(cost per episode/movie ranges from $0.99 to 2.99) as com-
pared to spending $100 every month on a cable subscription
that gives over 500 channels, most of which viewers don’t
watch at all. These subscriptions are also ad-free or with very
little ads and accessible on demand on different platforms
adding to user convenience. The advantages of having cable
are getting to watch live telecast of sports and television epi-
sodes and HBO. There is no legal way to watch HBO shows
except for buying their DVDs or having a cable connection.
Compelling advantages, but debatable if they are worth
the extra money, especially when cable costs continue to rise
year on year.
(Caselet Contd.)
TELEVISION 153
(Caselet Contd.)
The answer to who these consumers are lies in another

Nielsen report that exclusively studies Zero TV households. The
fact: 75 per cent of these households actually have a television
set. But 67 per cent get content on other devices apart from TV
and 48 per cent of them watch TV content through subscription
services. More than 50 per cent of these viewers are below 35.
So, young and savvy consumers are opting out of viewing cable
television. This number is bound to grow over time. While this
much is clear that audiences will move online, it isn’t going to be
easy for any other player to dominate this space either.
Netflix and Hulu Plus, two of the biggest players in this
space, didn’t start out intending to threaten cable television.
Both started out as services that were to augment cable TV
subscription by making old episodes of television series and
movies available. In fact, Netflix started out in competition
to DVD rental services. Over a period of time, Netflix, Hulu
and others not only saw the subscription base grow con-
tinuously but also that a number of these subscribers were
beginning to cut the cable cord. Netflix has a subscription
base of 27.1 million for its growing streaming service and 8.2
million for its dipping DVD service. Hulu Plus has around 3
million subscribers as of December 2012.
In 2010, Netflix signed a deal with Relativity Media, a
studio, that their theatrically released films will be licenced
directly and exclusively to Netflix, thus bypassing the
television channels in the process. It invested $100 million
to make two seasons or 26 episodes of ‘House of cards’. The
American adaptation of a BBC political drama stars, among
others, Kevin Spacey. The entire first season was released
on February 1, 2013 and each episode ran without a break.
Netflix claims that it added 3 million subscribers for its
streaming service as a result. At $8 a subscriber however, the
math doesn’t quite work out for Netflix and analysts have
been giving it mixed reviews. On the other hand, studios are
getting increasingly hostile. There is talk of some of the big
boys such as Apple, Amazon or Google getting into it.
(Caselet Contd.)
(Caselet Contd.)
But what does all this mean for advertisers? While online
advertising continues to grow for the newspaper industry, it
doesn’t compensate for the drop in the print revenues, leav-
ing the industry bleeding. This surprisingly may not happen
to television. Here is why.
First, while it is cheaper to subscribe to Hulu Plus, Netflix
or buy movies off iTunes, the consumer has to pay for almost
all the content he wants to see. There is hardly any good con-
tent available for free.
Second, the television industry is protected by the nature
of the content that it produces, i.e. content production is
expensive and not replicable by everybody. The Internet
biggies (like Netflix or YouTube) can change the nature of
content distribution but the inherent value offered currently
is still preserved. So while YouTube is great for music videos
and user generated content like cute cats purring on the
rooftop, audiences will have to end up going to ABC or HBO
for the next dose of their soap.
Third, advertisers are very positive about online video
advertising. In almost any study conducted in the US more
than three-fourth of the advertisers surveyed think that In-
ternet video advertising is a medium that is equally if not
more effective than TV. Online video advertising is benefi-
cial as it allows advertisers to target specific audiences and
provides interactivity for audiences. For example, Hulu Plus
offers only one ad per ad break and allows users to rate these
ads and also choose which ads they would like to see. Hulu
then charges a premium to the advertisers. Testing studies
have shown that fewer ads make them more memorable, a
win-win situation for both advertisers and users. Companies
have started including mobile and tablet advertising in their
media plans to complement TV advertising.
* Caselet researched and written by Sinduja Rangarajan, a
former qualitative researcher with TNS India and Colors. She
is currently studying journalism at University of Southern
California.
TELEVISION 155
Notes
1. Television refers to the Indian television business unless specified
otherwise.
2. Compounded annual growth rate. Source for growth figures: the FICCI-
KPMG report 2013.
3. This does not include an estimated 10 million DD Direct subscribers. DD
Direct is a DTH service from the state-owned broadcaster. It is however a
free-to-air service which involves only a one-time payment for the kit. All
the channels available on DD Direct are all free-to-air. The DTH figure is
based on TRAI’s estimates.
4. TAM Media Research is the largest provider of ratings and other data on the
TV business in India. The number of TV homes and related Indian figures
from TAM differ from those provided by Media Partners Asia (MPA) in
Table 2.2 differ, but for the purposes of this chapter, we will stick to the TAM
estimate. MPA is a Hong Kong based consulting firm.
5. Subscription and pay revenue mean the same thing and have been used
interchangeably throughout the chapter.
6. In February 2013 the New York Court dismissed NDTV’s case on the
grounds that it could be better dealt with in India. NDTV has appealed
against the decision.
7. Broadcast Audience Research Council – see The Shape of the Business,
Now.
8. Quoted from The Trouble with Television Ratings, Business Standard, 17
August 2012.
9. TDSAT, a specialised independent tribunal, was created to exclusively ad-
judicate upon disputes in the telecommunications sector, which was later
amended to include the broadcasting sector also. The TDSAT rejection of
the 2007 order is sourced from media reports in 2009.
10. PPVH can be calculated by dividing the price of the service by the amount
of time that an average household spends watching the service.
11. Much of the data for this part has been sourced from Asian Satellite Ser-
vices, An Asia-Pacific Regulatory Environment Index, CASBAA, 2007.
12. All the figures in this part on satellites are from Easing India’s Capacity
Crunch, a report released by CASBAA in March 2013. CASBAA is the
Cable and Satellite Broadcasting Association of Asia. The report was put
together by PricewaterhouseCoopers.
13. Cable networks in the US refer to cable channels such as HBO. These are
transmitted only via cable. The four broadcast networks (ABC, NBC, CBS
and Fox) are terrestrial channels that still command huge unduplicated
audiences.
14. Figures sourced from company websites in April 2013.
15. A bulk of the information on mobile TV is sourced from TRAI’s Consul-
tation Paper on ‘Issues Relating to Mobile Television Service’, September
2007.
16. See Rise of the Aggregators, Business Standard, 10 April 2012 .
17. Wherever not specified, government refers to the Indian government.
18. Wherever it is not specified, DD means Doordarshan, the state-owned

broadcaster.
19. Whether Show Theme or Hum Log was the first sponsored programme on
DD is a matter of debate.
20. Shah, Radhakrishnan and Kohli later set up a broadcasting company,
ETC Networks, and a cable outfit called Win Cable. Zee Telefilms bought
a 51 per cent stake in ETC Networks in 2002. Screwvala is the founder
and CEO of UTV which was acquired by Disney in 2011. He and Srivas-
tava were among the first two entrepreneurs to wire up South Mumbai.
Screwvala operated under a company called Nemula which was part of the
Western Outdoor Group.
21. A huge part of the numbers and facts here relies on the memory of the
entrepreneurs and business writers of that time. The figures might not be
precise but are approximately correct.
22. Khanna is a creative person who set up his own company, Plus Channel.
He was till recently chairman, National Committee of Media and Enter-
tainment, CII (Confederation of Indian Industry).
23. This circular was revoked in 2004, see the section on regulation.
24. The number of channels is as in April 2013.
25. Multi-system operators or wholesale distributors of television signals.
26. RPG Netcom, which later became Indian Cable Net, was sold to Siti Cable
Network, a Zee Telefilms subsidiary, in 2005. Siti Cable is now demerged
from Zee and is called Wire and Wireless Limited. The Zee Group split
into four companies in 2006 and the flagship company Zee Telefilms is
now Zee Entertainment Enterprises.
27. The numbers of cable operators are estimates based on conversations with
industry experts such as Dinyar Contractor, editor of Satellite & Cable TV
magazine.
28. As a result of so much cash sloshing around unaccounted in the system,
the cable industry has become a bit like what the film industry was earlier.
In the nineties the underworld was called in at times to sort out territo-
rial disputes. According to some estimates currently about 60 per cent of
the cable systems in India are owned by politicians or their relatives. This
unaccounted money, say industry sources, has become a huge cash source
for fighting local elections.
29. These figures are relevant for 2003 and 2004, the years in which a lot of the
CAS turmoil happened.
30. NASSCOM is the National Association of Software and Services Compa-
nies. Sen passed away in 2003.
31. However when new pay channels are launched, rates do go over 7 per cent.
Cable operators and broadcasters circumvent this by creating a separate
bouquet, for which consumers are charged without informing them what
it is for. So, across metro cities, most homes have seen cable rates go up to
`400 per home per month.
32. If we take the cost at `700 to `3,000 per subscriber for 60 million homes
in 2006.
33. See Chapter 3—Film.
34. All numbers as in April 2013.
TELEVISION 157
35. Assume that of the 106 channels about 50 buy original programming.
Many, like say Cartoon Network or HBO do not need to do original pro-
grammes. Cartoon Network dubs some of its shows in Indian languages
while HBO is a purely English movie channel. The others, like news chan-
nels, develop their own software.
36. These two models are discussed in detail in the portion on broadcast.
37. At one point, about 50 per cent of the programming time on Sun TV was
sold for a telecast fee, the rest was used by in-house or commissioned pro-
gramming. The current break-up for is not known.
38. Zee’s annual report for 2011–12 and a corporate presentation dated June
2012 on its website.
39. Branded as TiVo in the US.
40. What actually happens is that the DVR keeps recording the programme.
When you play the television again what you are watching is what was
recorded when you went to take the call. While you are watching the show
from the point where you left it, it continues to record the live broadcast
and show it to you in the right sequence.
41. Taking 2003 a base year and a conservative estimate of `5 billion as cable
ad revenues in that year, we arrive at a figure of `11.71 billion for 2012.
This is based on the assumption that these revenues grew at 10 per cent
every year.
42. Data sourced from TAM.
43. The term ‘TRP’ though still in use, describes ratings in the diary system.
When the Peoplemeter service was introduced, the term was changed to
TVR. Both mean the same thing.
44. The figure for what TAM charges now varies widely depending on who
you speak to. Also TAM was chary about sharing figures. So I am going
with the 2006 figures.
45. According to TAM an additional 715 meters are getting added in the boost
up for SEC AB homes in the 6 Metros. This will take the total meters to
10,317 meters by end of 2013.
46. There is no official note on aMap’s shut down. This information comes
from media reports in 2011.
47. Trouble with ratings and The birth of BARC are excerpted in large parts
form an article I did for Business Standard. See The Trouble with Ratings,
Business Standard, August 17, 2012.
48. A network in the US refers to a terrestrial channel like CBS, being distrib-
uted via cable operators.
49. This was in July 2013. TDSAT is the Telecom Disputes Appellate Tribunal,
a specialised independent tribunal, created to exclusively adjudicate upon
disputes in the telecommunications sector, which was later amended to
include the broadcasting sector also.
50. She is currently with Star India.
51. The data on the legal updates from 2008 to 2012 was collated by Abhi-
nav Shrivastava, an associate with the Law Offices of Nandan Kamath in
Bangalore. The updates on the legal section between 2006 to 2008 were
done by Anish Dayal, advocate, Supreme Court of India and a specialist in
media and entertainment law.
52. The Cricket Association of Bengal had sold the rights of the Hero Cup to
ESPN, a new private entrant into India at that time. However, being a for-
eign broadcaster, ESPN was not allowed to uplink from India. This made
it impossible for it to broadcast the match live from Kolkata. The Supreme
Court judgement was born out of the litigation that followed this contro-
versy.
53. The prime band is a frequency that all television sets in India can receive. It
can, however, accommodate only 11 channels. Therefore, having a channel
on the prime band is crucial to ensuring complete reach.
54. FII—Foreign Institutional Investors; OCBs—Overseas Corporate Bodies;
NRIs—Non-resident Indians.
55. Uplink means sending a television signal from the ground to the satellite.
The satellite then bounces it back to the targeted location. The process of
catching the signal sent back by the satellite with a dish antennae is called
downlinking. Typically cable operators or MSOs do this.
56. VSNL, a government concern, was acquired by Tata Communications in
2002.
57. See http://mib.nic.in/writereaddata/html_en_files/tvchannels/FinalUplink-
ingGuidelines05.12.2011.pdf
58. One of the first cases related to the telecast of the India–Pakistan Cricket
Series held in Pakistan in March 2004. It was acquired by Ten Sports from
the Pakistan Cricket Board for a huge consideration. The Madras High
Court directed that the Ten Sports signal would be carried by DD and
some compensation for dilution of exclusivity would be paid to Ten Sports.
This arrangement was confirmed by the Supreme Court.
59. For the news broadcasters content guidelines—http://www.nbanewdelhi.
com/pdf/final/NBA_code-of-ethics_english.pdf
For the entertainment broadcasters content code—http://ibfindia.com/
guidelines.php
60. In the case of Prasar Bharati vs. Sahara TV Network, the High Court of
New Delhi made some interim arrangements for use of cricket footage. The
Court also desired the constitution of an expert committee to recommend
the extent of use. The committee submitted its report in relation to cricket
matches under the Board of Control for Cricket in India. A similar ‘illegal
use of footage’ case, between ESPN Star Sports and Global Broadcast News
was argued at the Appellate Stage before the High Court of Delhi. The
Court observed that repeated use of footage beyond an acceptable period
was not fair dealing and therefore not sustainable.
61. CMTS is Cellular Mobile Telephone Service licence. UASL is United Access
Service Licence.
62. As the number of channels goes up they will have issues because satellite
space is a problem. See The Shape of The Business, Now.
63. Edited excerpts from The New Rules of Content, Business Standard, March
5, 2013.
64. Some parts of this caselet are edited excerpts from India’s Broken News
Business, Business Standard, March 25, 2011.
65. The Winning Streak, August 20, 2011, The Economist.
CHAPTER 3
Film
In its hundredth year, Indian cinema looks young, fit and with it.
W atch Kai Po Che, Vicky Donor or Peepli Live in Hindi. Or

watch any other small or medium budget successful film
in an Indian language of your choice to understand this chapter.
Take Kai Po Che for example. It is a warm, funny and yet upset-
ting look at the lives of three friends and their coming of age. It
is set against the background of the Bhuj earthquake of 2001 and
the Gujarat riots of 2002. It doesn’t make any political statement.
It simply tells the story of three friends trying to live their lives
at that time. The film, produced by Disney UTV1on a budget of
`300 million, did exceptionally well at the box office. The film
has a completely unknown cast and crew. And yet they are clearly
talented.
The last five years have seen an avalanche of talent coming out
of the woodwork and into the Indian film industry—directors,
actors, writers and musicians among hundreds of others. You
never heard of them and yet they are creating some good and
successful films. Kai Po Che is just one among them. Vicky Donor
and Peepli Live among dozens of others, use a largely unknown
cast and crew to tell an unusual story. They are perhaps the best
examples of all that is going right with the Indian film business in
its hundredth year of existence.2
It is now becoming a creative hotspot where filmmakers and
writers are telling their own stories with a confidence and pa-
nache that didn’t exist 20 years ago. These may be urban stories,
rural stories, stories about housewives or construction workers
or just intellectual meanderings. But the strange thing is that
these stories are being told, they are being sold and, more often
than not, they are finding buyers.
Much of this creative unleashing has happened because the

business has delivered. And that is the point that Kai Po Che or
any of the other films illustrate. In 1983, an unknown director
called Shekhar Kapoor made a film called Masoom.3Another un-
known called Mahesh Bhatt made Saaransh, another wonderful
film.4Both of them were great pieces of work but they had a tough
time getting money, backing or distribution (see ‘The Past—The
Messy 70’s and 80’s’ below). What has changed between then and
now is that studios such as Eros, Disney UTV and Yashraj are
pushing these films with a distribution and marketing muscle
that was unheard of in the 80’s.5 Large chains such as PVR or Inox
and thousands of digital screens are happy to screen them. What
has changed is that India is no longer a one-size-fits-all Sholay
market. It is a market for many different kinds of films, all of
which are managing to find their audience though multiplexes or
single screens, on TV, online and even on the mobile. Its volumes
and heterogeneity are much better represented in the variety of
films coming out than on the programming served on TV. And
what has changed is that this market is delivering steadier returns
than it ever did.
It is hard to imagine that this business was a basket case just a
dozen years ago. Clearly, the Indian film industry has learnt the
lesson of its bad years and learnt it well. It has cleaned up its act
spectacularly. The two big challenges now—size and profitabil-
ity—are evolutionary rather than structural.
On size, the gleaming new companies are as yet small—the
largest, Disney UTV, is close to `4 billion in revenues. The larg-
est media group, Times, clocked revenues of just over `67 billion
in March 2013. That makes it roughly six times the size of the
entire Indian film industry (see Table 0.4). So, film has a long
way to go.
On revenues and profitability, India looks particularly bad be-
cause it is the largest film-making country in the world. In 2012,
for instance, the thousand-or-so movies made in India led to the
sale of over 3 billion tickets for about `85 billion in home box-of-
fice revenues. Add other revenues—home video, satellite rights,
overseas and so on—and Indian films made over `112.4 billion
from the content they generated.6 That is just over US$ 2 billion
(see Table 3.1). Hollywood, on the other hand, released 677 films
and generated US$ 10.8 billion from the sale of 1.36 billion tickets
FILM 161
in the domestic market alone in 2012. The total revenue it gen-

erated, including overseas and home video, was about US$ 40
billion.
You could argue that the size of the two economies and the
purchasing power of its people are so different that it is silly to
compare the two. And you would be right. The idea is not to put
down the achievement of the Indian film industry but to point
out that it has a long way to go before it makes the most of its
prolific nature.
One part of the answer involved getting organised and attract-
ing capital, both of which the industry has managed to do. Over
the past 5–7 years, it has been transformed beyond recognition
into a regular business. The other part is pushing for growth—
by increasing the reach of cinema (see Figure 0.2c), pushing up
average ticket prices and expanding into markets within and
beyond India. Many of the larger companies are now investing
in distributing films abroad and in producing films in different
Indian languages. Almost all of them have an online presence
and are very conscious of its potential. So, the journey that will
make Indian film companies bigger, better and more profitable
has begun.

The Issues
In terms of the numbers of films produced, the Telugu industry
is the largest segment in India, followed by Hindi films (see Table
3.1). The essential character of the business is as yet fragmented
and somewhat insular. The language cinema is a world within
itself and this creates the first issue.
Lack of Unity
As in publishing, the extreme fragmentation in the film business
has meant that the industry speaks in different voices on differ-
ent issues and never gets its act together as one. The multiplex
owners have an association of their own which lobbies for one set
of things while owners of single screen have a separate agenda.

Within these two there are the North and South divides. With-
in the production community, there is a sharp divide between
Hindi and all other languages. The Southern industry refuses to
acknowledge that Hindi has moved way ahead of the South on
cleaning up its act and corporatisation. At a FICCI-Frames7 con-
ference in Chennai in 2009, several speakers and people in the
audience kept talking about the ‘underworld money in Mumbai’,
in spite of the fact that the industry is absolutely clean. Most of
the southern film people talked to foreign investors from a silo
that only considers their language and market. Some of this stems
from the media coverage Hindi films get in mainstream media. Ex-
cept for a Robot or a ‘Kolaveri Di’ from the film 3, rarely anything
finds a mention in the national papers. The other part stems from
the fact that though they do tell nice stories in Tamil, Telugu and
Kannada, these films rarely get nationally acknowledged.
The thing is that there are a huge number of issues on which
the industry needs to talk as one, the biggest of these being taxa-
tion. Entertainment tax varies wildly from state to state: from 50
per cent and more in Maharashtra and Bihar to nothing at all
in Himachal or Punjab. Then there is the whole issue of grant-
ing infrastructure status to the building of cinema screens and
multiplexes. These are the battles the industry should be getting
together to fight.
Protectionism
In 2006, the Telugu film industry (based in Andhra Pradesh) de-
cided to impose curbs on dubbing non-Telugu films into Telugu.
It was taking a cue from the neighbouring state of Karnataka.
This was in response to a perceived threat from Tamil movies
which draw a good collection, especially the ones with stars such
as Kamal Haasan and Rajnikanth. In 2011, producers such as
Mahesh Bhatt in Mumbai and others in Chennai began the cho-
rus for a ban on dubbed Hollywood films. These films dubbed in
Hindi, Tamil, Telugu and Bhojpuri, among other languages, have
managed to find wider audiences. Their contention was that Hol-
lywood movies were eating into the share of local films.
This argument is silly. According to the FICCI-KPMG report
of 2013, roughly 35 per cent of the revenues of a Hollywood film
FILM 163
come from dubbed versions. The rest comes from the original in
English. For all the dubbing, Hollywood’s share in total box-office
collections in India remains at 8.5 per cent, says the report. It has
always hovered between 5–10 per cent. Read any international
report or analysis on the global film industry. India, along with
South Korea and China, has the strongest local industries in the
world.8 And unlike China or parts of Europe, India has no quotas
or limitations on how many films can be imported. So why are
we worried? And there is another reason this argument does not
hold. If as a Hindi/Marathi speaking person, I can watch Tamil or
Telugu films, it helps the industry make more money and, theo-
retically, gives me access to the entire repertoire of about 1,600
films made in India in 2012. Similarly if I can watch English,
French or Iranian films with dubbing or subtitling, on TV or in
the theatres, it simply expands the array available to me. It is my
right, as a paying consumer, in a democratic country. The way to
fight a competitor, whether it is an Indian movie or a global one,
is by making better movies, not by stopping viewers from watch-
ing these movies.
Then there are other forms of protectionism. One of the big
trends, as you will read later, is of national studios expand-
ing their bases across the country into Kolkata, Hyderabad and
Chennai. This has made local firms raise their guard. The Ta-
mil film industry, for instance, is insular and conservative. So,
a Disney UTV or a Fox Star cannot become members of the Ta-
mil Film Producers Council (TFPC).An analyst points out that
Ronnie Screwvala, managing director, Disney UTV, is registered
as an individual member with the TFPC. His company Disney
UTV is registered with the Film and Television producers Guild
of South India. The membership of this body is critical to get a
censor certificate, while the membership of TFPC is needed to
register the title of the film. ‘The TFPC is a fiercely pro-Tamil
body which is against allowing any companies from Mumbai
becoming members. They believe that they will come here and
spoil the market’, says Sreedhar Pillai, a Chennai-based film ex-
pert. But going national is a business imperative and I doubt if
these small barbed fences around regional markets will prevent
the studios from growing. Most usually brush off these concerns.
‘There was a certain amount of trepidation to start with but now
it is cool’, says Siddharth Roy-Kapur, managing director, studios,
Disney UTV.9
The Dependence on Stars

While new talent continues to come into the business, the fact is
that it is still highly dependent on stars. ‘Talent make up roughly
half the cost of a film. That is 30–40 per cent more than it should
be’, says Siddarth Roy-Kapur, managing director, studios, Disney
UTV. This skews the economics somewhat. As a result, several
stars have now chosen to become producers and take a revenue
share instead of asking for higher fees. This way the risk gets di-
vided. The puzzling question: if the studios have the muscle in
distribution and marketing to promote films with new talent,
why then does the overdependence on stars continue? Ajay Bijli,
chairman and managing director, PVR, reckons that it is because
stars mean low risk. Most of the studios make at least one or two
high-budget films every year. And that is the one they do not
want to take any risk with, so they prefer to stick to a star who
will at least draw the audience in during the first weekend.10While
even Hollywood has this issue, as it matures and find better ways
of doing big budget films—using technology to create creatures
like dinosaurs or talking lions or making Spiderman fly—the re-
sults are heartening. As the creature films, the big spectacle films
tell their stories as well as those with humans, the dependence on
stars does go down, but only gradually.
The Glut in Production

It is time to rethink the tag of being the world’s largest film-mak-
ing country or the one that sells the maximum tickets (see Table
3.1). India is an unprofitable film market, not just because aver-
age ticket prices are lower at, say, half a dollar against US$7–12
elsewhere in the world. It is an unprofitable market also because
we simply make too many films. There isn’t much data to sup-
port this contention but here are the results of a small analytical
exercise I did in 2011.
India released about 1,200 films as opposed to 677 films by
Hollywood in 2010. The three big Indian studios released a total
of 138 films in 2010. These accounted for 10 per cent of the to-
tal revenues of the Indian film industry in that year. In the same
year, in the US, 50 films by four large studios accounted for 70
per cent of the total revenues of the industry. Warner Brothers
FILM 165
was the largest studio in that year. It released 23 films such as

Harry Potter and the Deathly Hallows (part one) and Inception.
Its filmed entertainment division earned close to US$12 billion
or just about half of parent Time Warner’s total revenues in that
year. Disney released 16 films and its film division did US$6.7
billion in revenues. The four studios averaged between US$400
million – US$500 million per release.11 On an average the larg-
est studios in the world did 12–16 films a year or roughly one
every month. So they don’t make too many films. What they do
is squeeze every dollar possible out of these films; that is where
their big competitive advantage lies.
In India studios such as UTV average 12 films, Eros does over
a 100 films a year and Yashraj does three or four.12Siddarth Roy-
Kapur, managing director, studios, Disney UTV reckons that 12–
15 is the sweet spot for most studios in India. However, it is the
‘squeezing revenues’ bit where the problems come in. One part
being there aren’t enough screens and average ticket prices are
still low. But the biggest reason is that we simply make too many
films. So out of 1,200 films in 2010, if 300 had a chance of mak-
ing 30–50 per cent profits, only 50 probably did. This is because
there are very few times of the year a film can be released without
too much competition from say school and college exams, IPL
or other such events. Given that there are probably 30 weekends
when it makes financial sense to release a film, 1,200 is a lot of
films jostling for those weekends. This means that even the 300
films that had a chance of making decent returns never manage
to reach their potential. The reason we make too many films is
because, just like news channels, films too get a lot of random,
glamour-struck investors who jump in to spoil the party. These
could be real-estate barons or jewellers or anyone with a little
extra cash. They don’t mind losing money for their one-off film.
But their entry spoils the market for the professionals wanting to
build a business.13
The Talent Crunch

Siddharth Jain, founder and CEO, iRock Media,14 reckons that
one of the big things that could hold up the film industry’s growth
is the lack of producers—or individuals who have the ability to be
what a conductor is to the orchestra. It is good producers—with
the ability to pick scripts, read them, visualise the best director,
star-cast, production or finance company that would fit the film,
who are instrumental in creating hits.
You could argue that in an industry with so much talent across
functions—acting, writing, direction and so on—how difficult can
that be. While there is a lot of talent in the business, the problem,
says Jain, is that it is too spread out. It is a producer who brings it all
together. ‘Why is growth not happening at a faster speed (consid-
ering the amount of action)?’ he asks rhetorically. That is because
if a production company has 10–15 projects, it needs as many
line producers, writers and so on. Generally the same team works
across projects and that slows growth down, because ultimately
one producer can oversee only one film at a time.
‘Most good producers do not want to join studios because
they pay badly. Also studios can’t seem to be able to do deal with
them,’ thinks Jain. For instance, some of the top producers in the
business—Ritesh Sidhwani (Dil Chahta Hai, Lakshya and Don)
or Sajid Nadiadwala (Mujshe Shaadi Karogi, Judwaa), would pre-
fer to put together a film project in the way they see fit and make
money on the upside, rather than work for a studio. In television,
the problem of scaling up is solved with executive producers,
who handle one or two projects at a time. In film companies, that
is yet to happen.
It is not just at the production end that the problems in the
eco-system show up. Even at the retail and distribution end the
issues are similar. For example, while scale is crucial in the multi-
plex business, there aren’t enough good architects or construction
companies according to one former CEO of a multiplex com-
pany. In 2009 the government set up a Media and Entertainment
Skill Council or MESC under the National Skill Development
policy. The MESC will act as an accreditation body for training
and focus on various segments of the industry—films, print, TV
and so on. It will form institutes to train technicians, spot boys,
stuntmen needed in the film business.
The Opportunities
The need to scale up and get better at making money along with
the changes the market is going through throws up a lot of op-
portunities. Some of these are obvious, such as getting into the
FILM 167
market for other Indian language cinema or selling Indian films

to the lucrative overseas audience. Others are more subtle such
as digitisation and the corresponding rise in average ticket prices
that it brings. Here is a look at some of them:
Going National
Eros, Disney UTV, Reliance, almost all the big studios are now
investing in other Indian languages in their bid to scale up.15
Each of them has anywhere between 4 and 10 non-Hindi films under
production. These are in almost all major languages—Malayalam,
Tamil, Telugu, Bangla, Marathi and Punjabi, among others. The
non-Hindi market brings in only one-fifth of total revenues for
the industry. This figure is small because not enough has been
done to monetise films in other languages. So while Tamil is big
in Tamil Nadu, the fact is it could have a market elsewhere too
with the help of DTH or satellite TV. One of the big things that
data collected by TAM post digitisation in the metros shows
is that the long tail of content is increasing. For example, the
consumption of Tamil channels has shot through the roof in
Delhi post-digitisation in late 2012. That means that some un-
met demand is now being met thanks to DTH and digital cable.
Investing in Tamil, Telugu, Marathi or Bangla cinema brings
three advantages to the studios.
One, the average budget for these films is less than half that
for a Hindi production, so in percentage terms the margins are
better, even if the revenues are not as big as Hindi (see Table
3.3) Two, it brings economies of scale especially in distribution
and marketing, the costs of which are going through the roof.
Three, it helps cross-pollinate ideas and people between dif-
ferent markets and sensibilities. The South, for example, has a
better handle on storytelling and scripts, something the Hindi
market misses, especially for big-budget films. Investing in Ta-
mil films could get the Mumbai studios access to new writers
and ideas. A lot of the non-acting talent is happy to work across
languages making remakes easier and lucrative. One of the big-
gest Hindi hits in 2011, Singham, was co-produced by Reliance
in Tamil. It then remade the Hindi version. Eventually most
studios expect 30–50 per cent of their revenues to come from
languages other than Hindi.
The Overseas Market

The other big growth area is the overseas market which this book
has talked about across all editions. It is finally delivering serious
results. The FICCI-KPMG report of 2013 reckons that Indian films
generated `7.6 billion at the global box-office in 2012.16 About
70 per cent of this came from three markets—the UK, USA and
the Middle East. Tamil films are popular in Singapore and Ma-
laysia. For the top 10 Tamil films, more than three-fourths of the
overseas revenue came from Malaysia. 3Idiots, one of the biggest
Indian hit in the overseas markets recently, is a great example of
the possibilities (see Caselet 3a). The overseas market presents
Indian firms with an audience and market to exploit should they
want to scale up the business and milk the films a little more. But
global markets need distribution and marketing muscle. Many
of the Indian studios—UTV, Yashraj, for instance—have set up
distribution arms overseas. The biggest hits in India release with
anywhere between 1,500–3,500 prints. To make a serious dent in
the global market a company would need to release at least the
same number of prints overseas.17 Then there are the usual ques-
tions about the length of Indian films, their tendency to use songs
as part of the narrative, the language they use and all of that.
Yet, venturing overseas is an imperative especially if Indian
film companies want to scale up. Consider that about 69 per cent
of the US$ 34.7 billion that American films made at the box office
in 2012 was made outside of America.18 This means that an over-
seas opportunity exists for any film industry that seeks it. There
are four ways in which the Indian film companies can tap into it.
With Indian content The audience for Indian content is not
just the diaspora but also people who are culturally aligned to
Indian sensibilities. These could be other Asians or people of In-
dian origin, such as those in South Africa, Fiji or Surinam, who
identify with Indian films. One EY report estimated that there
are two billion people overseas who have cultural affinity to Indian
content. For long this market has been served by dodgy operators
and distributors. However, the Internet and home video now of-
fer an outlet for films wanting to tap into the smallest segments
of these markets. In addition to this the obvious popularity of
FILM 169
Indian films at the box office in several mature markets such as

the UK, means more theatre chains are willing to pick up Indian
films for mainstream release. Besides this Indian films are finding
cultural affinity in unusual places. 3 Idiots had some unusual suc-
cess in markets such as Hong Kong, Mainland China and South
Korea where it grossed $3.5 million each. Kahanii was the other
film that did well in China and Hong Kong.
With global content A more risky game is to create films that
have global appeal. These may or may not have Indian themes
and their story should be able to cut across cultures. This is a
tough one to figure out and several Indian companies have stum-
bled trying to do it—Marigold, released in 2007 by the erstwhile
Adlabs, is one example. But harnessing this opportunity means
access to the global market for films, not just the one for Indian-
themed content. It needs Indian film companies to work with the
Hollywood majors now setting shop in India to cook up scripts,
distribution and marketing strategies that will make this happen.
This means forming relevant alliances, like the one between Vi-
acom and Network 18 or between Disney UTV.
The all out strategy Another approach is to go all out for the
global market, by acquiring companies, expertise or retail and
distribution muscle in those markets. For example, in 2008 Anil
Ambani’s Reliance invested $325 million into Steven Spielberg’s
somewhat cash-strapped DreamWorks which went on to make
the Academy award-winning Lincoln, among other films, with
this money. Then there were other smaller deals with individual
production houses. However, not too many film companies in
India have that kind of money. But just as Bharti Airtel expanded
into Africa or the Tatas into the UK and other countries, film
companies too will spread their wings once they achieve scale in
India.
Outsourcing The last approach is finding opportunities for do-
ing outsourced work for Hollywood Studios, from India. Much
of the outsourced work Indian companies have done so far has
been in the area of animation and special effects. The Chronicles
of Narnia: The Lion, the Witch and the Wardrobe, are among the
other major hits where a lot of work was done in India.
Hollywood in India
For decades, India was a ‘bottom of the chart’ country for most of
the big studios on box-office collections. It is still a laggard. Ac-
cording to the FICCI-KPMG report the box-office share of Hol-
lywood films was 8.5 per cent of the total box-office takings in
India in 2012. This, in spite of the fact that currently no import
restrictions, such as the quotas—that several European countries
or China have—apply to films coming into India. The reason is
simple. Indians love their entertainment in their own lingo and
context. While typical Hollywood fare such as Avatar or Spider-
man do good business (especially after being dubbed), most of
the others find favour either only in the metros or on the home
video circuit. This skew toward local fare along with an unprofit-
able market, meant that the studios never saw the point in in-
vesting in India. In any case, Hollywood has an extremely poor
record on localising in most markets. It prefers to sell its own
content in dubbed or sub-titled version.
Between 2006 and 2008 almost every major Hollywood pro-
duction company went on to announce local productions. Sony
Pictures Releasing of India, made its first Indian film, Saawariya
with filmmaker Sanjay Leela Bhansali. Viacom tied-up with Net-
work 18 to create Viacom18 (Kahanii, Gangs of Wasseypur) and
Twentieth Century Fox (News Corporation) set up shop with
Fox Star Studios (My name is Khan, Jolly LLB).19
The reason this happened is simple. Almost every major Hol-
lywood studio is the property of a media conglomerate. Twenti-
eth Century Fox is owned by News Corporation, Paramount by
Viacom, Sony Pictures by Sony Corporation and so on. All these
companies have seen phenomenal growth in their India revenues
in television after localising their fare. Two per cent of News
Corporation’s global revenues now come from India. Disney,
Viacom, Time-Warner, all have seen their television businesses
in India grow and become dominant in their Asia portfolio. The
business logic for localising, even in films, was therefore irrefu-
table. The birth of a few small but solid Indian film companies is
the cherry on the cake. As the business corporatised, the money
coming back into the studios kitties increased, and it has become
easier to do business in India. Plus there are the opportunities
for joint ventures and acquisitions. Notice that most studios have
tied-up with local companies.
FILM 171
This is very good for the Indian industry as it corporatises.

These competitors and joint ventures will force them to clean up
their processes and build organisations instead of settling for the
one-man show that most of film production in India has been for
so long.
Digitisation
Across the value chain—from production to distribution and ex-
hibition—digitisation is making inevitable changes. It is pushing
down the cost of making, distributing and watching a film. The
area where this change is having the biggest impact is in exhibition
or what we call the theatrical release of films. Roughly 70–80 per
cent of all the prints for a film are now digital. That’s because almost
80–90 per cent of the screens in India are now digital. The digitisa-
tion which began in the beginning of the millennium is now near-
ing completion in India. (See Table 3.2.) This has phenomenal im-
pact on everything. The cost of a digital print is less than one-tenth
that of a regular celluloid print. This means that even the average
film can release with 1,000 prints or more and reach out to the
largest number of theatres possible. The bigger films release with
2,000 to 4,000 screens. Dabangg 2 (2012), for instance, released at
over 3,500 screens. This ensures that a film gets the widest release
possible. It gives a better viewing experience and also kills piracy
because the film is available across India on the same day. Eventu-
ally, this along with better theatres should help improve average
ticket prices, another way in which the film industry could im-
prove profitability. (More details on digitisation and how it began
in ‘The Birth of a New Film Industry, 2002–2006’.)
The Trends
Three broad changes are emerging:
The Rise in Cinema Advertising20

Over the last four years, cinema advertising has found new life all
over again. Almost every major chain has seen a doubling of the
money advertisers are spending inside theatres—either on the
screen or off-screen within the theatre premises (See Table 3.2).

According to estimates the total money spent on advertising in
cinemas was `3 billion in 2012–13. This is roughly one-fifth the
money spent on radio or 13 per cent of that spent on digital. Go-
ing by estimates, it is growing three times faster than advertising
on radio and about as fast as digital. This growth is not coming
from a local coaching class or the neighbourhood restaurant. In-
stead, it is the consequence of large national advertisers such as
Dabur, Lufthansa or Tata DoCoMo adopting the medium. From
almost nothing many of these brands are now spending bigger
slices of their advertising budget on cinema. For instance, more
than 80 per cent of PVR’s advertising revenue comes from na-
tional brands. None of these names would have ventured into
cinema advertising five years ago even though its reach is phe-
nomenal. Remember that India sells between 3–4 billion tickets
every year. That is a lot of people walking into its 10,000 odd
screens.
Though this reach was available earlier too, three things
changed recently. One, the theatre chains have started selling
their own ad space instead of relying on concessionaires such as
Dimples or Salvos. Two, the audience with purchasing power has
started coming back to the theatre thanks to multiplexes and dig-
ital single screens. These are the people advertisers want to reach.
Three, as the clutter on other media increases, cinema offers the
best way of reaching captive audiences. Think about it. You are
helpless against an ad when you are in a theatre—there are no
doorbells, no colleagues, no other media and certainly no remote
control. This makes anyone in a film theatre a very coveted target.
However, this holds true only in mature media markets such as
Mumbai, Delhi and so on. More than 80 per cent of the advertis-
ing revenue that PVR makes is targeted at these cities.21
As advertising grows, digitisation spreads and more people
come back to the theatre, ad revenue should increase. It already
accounts for between 5–20 per cent of revenue for multiplex and
single screen chains. (See Table 3.2) What could impede growth
somewhat is the lack of metrics. Unlike ratings in TV or reader-
ship in newspapers there aren’t any established metrics to meas-
ure the effectiveness and reach of cinema. Some chains bench-
mark their rates and reach to TV.
FILM 173
The Falling Windows

In January 2013, actor Kamal Haasan said that he was in talks
to release his bilingual film Vishwaroopam on DTH before the
theatrical release.22 The idea was to charge `1,000 per home for a
premiere across a chunk of India’s 51 million DTH homes. Pro-
tests from theatre owners in Tamil Nadu, Haasan’s key market,
made him drop the plan. Nevertheless, several unknown film
makers have done the same thing and known ones are trying to
reduce the gap between the theatrical release and the appearance
of the film on other formats. Mr aur Mrs Khanna (2009) was on
DTH within four days of its theatrical release. Kaminey, a big hit
in 2009, was on DTH within a month of its release.
The gap between the theatrical release and the film’s appear-
ance on other formats is called the window. It was anywhere be-
tween 6 months to 3 years depending on the market, the for-
mat and the language. For example, in the conservative South
the windows were much longer than in the commercially sav-
vier Mumbai market. Over the years it has shrunk in response to
business imperatives. Everytime there is a push to reduce it fur-
ther, there is a huge backlash from the theatre owners. The reason
film companies want to keep compressing it is to fight piracy and
capture all the potential revenues for the film. Pirates exploit two
things. One, any gap in the release on different formats such as
home video, DTH, online. Two, any time lag between the release
across cities or audiences. For example, if the film is released first
in the top 30 cities and then in the rest, the potential in the small-
ertowns is killed by piracy. The more delay there is in releasing
it on all the formats to all audiences, the more the likelihood of
piracy, bad prints and of losing audiences to sheer disinterest and
poor word-of-mouth. To avoid the loss caused by all of these fac-
tors, production companies are constantly negotiating with thea-
tre chains. Over the years the release windows have fallen. But
the push from digital has made even a few weeks seem too long
a gap. Pirated versions of a film can be found on peer-to-peer
networks or certain websites the same day as its theatrical release
or even earlier.
Therefore the inexorable push to reduce the windows especial-
ly for other formats. Though home video is shrinking, television
is a big revenue stream and pay-per-view on DTH is emerging as

a serious contender. “A decent movie gets 200,000-300,000 views
on DTH and this is a completely new revenue stream. You can
create this window from day zero to day 21 or more. On day zero
a film could be priced at `1,000 on DTH, decreasing progres-
sively and going to `50 per view in the last phase,” says Harit
Nagpal, CEO, Tata-Sky, a DTH company.23Then there is YouTube
or the net, a great way to reach the overseas audience and break
the whole barrier of distribution. Unfortunately, piracy eats away
a lot of this market too. There are, however, sites such as Shema-
roo, Rajshri and T-Series which are among the top ten online
channels out of India.
Consolidation in Retail
In 2012, PVR acquired Cinemax India to become India’s largest
multiplex chain. (See Table 3.2) In 2010, Inox Leisure acquired
Fame. Multiplex chains have been consolidating. On the other
hand, on the single-screen front, digitisation is leading some kind
of proxy consolidation through digital cinema companies such as
UFO Movies and Real Images. Roughly 70 per cent of the active
screens are now owned or controlled by organised entities. This
makes for a simpler and more streamlined market. Remember that
until ten years ago, dealing with 11,000 different theatre owners
was the biggest block to a national release. Film companies can
now actually tie up a release by negotiating with 10–12 companies.
This makes for a market where economies of scale come into play
and revenue leakages get plugged further. With any luck this will
translate into more cash for investing in more screens.
The Past
The Beginnings
After Thomas Edison perfected the Kinetograph, a camera ca-
pable of photographing objects in motion, the first motion pic-
ture studio was formed to manufacture Kinetoscopes. These first
few movies, essentially filmstrips viewed through a peephole
FILM 175
machine, were then shown at a ‘Kinetoscope parlour’ on lower

Broadway in New York. It was extremely popular and crowds
milled around to see it.
Soon after that, films came to India. The first film was screened
in India on 7 July 1896, at The Watson’s Hotel, Bombay (now
Mumbai). The Arrival of a Train at Ciotat Station and Leaving the
Factory, the first reels ever shot of a real film had been screened
just six months ago in Paris, at their ‘world premiere’. The Lumiere
operator Maurice Sestier was on his way to Australia. He stopped
over in India to show what The Times of India hailed as ‘The
marvel of the century’. The film was presented to an audience
of English folk and some ‘westernised’ Indians. A week after the
Sestier screening, Novelty Theatre started projecting short films
from the Lumiere repertoire. These were accompanied by an
orchestra and—of course—ran to full houses.24
Soon, there were travelling theatre companies screening films
in theatres and maidans across the country. There were James
B. Stewart’s Vitagraph shows in 1897 and the Moto-Photoscope
created by Ted Hughes. By this time, the first few screenings had
been made in Calcutta (now Kolkata) and Madras (now Chen-
nai) too. The projection of short films with titles like The Races
in Poona or A Train Entering the Station in Bombay began. Many
of these were shot by European cameramen or by Indian enthu-
siasts like Hiralal Sen. Other subjects included bazaars, religious
processions, plays and monuments. A lot of the impetus for these
films came from the English. By 1901, Indians became good at
using the medium too. Sakharam Bhatavdekar, a Marathi pho-
tographer from Bombay, echoed nationalist sentiments in the
film, The Return of Wrangler Paranjpye to India. Paranjpye was a
mathematician who had been honoured at Cambridge. Sen and
Bhatavdekar are referred to as the first Indian filmmakers.
The business of cinema started almost as soon as the medium
took off in India. Whether it was setting up studios, theatres or
importing the equipment, enough people got into the act. The in-
vestments came largely from American or European companies
like Pathe. It was one of the first few to open a branch in Bombay
in 1907 to sell equipment. Gaumont, Éclair Vitagraph and others
followed.
In 1905 came the Elphinstone Bioscope Company from
Jamshedjee Framjee Madan. The films his company made were
nationalistic—like Jyotish Sarkar’s films on the protest rally

against Partition. J.F. Madan quickly spread his wings with a
chain of ‘picture palaces’ (cinema halls) across the country and,
by 1927, owned 50 per cent of the Indian cinema distribution
network. He also dominated film production in India for a long
time. There were others like Abdulally Esoofally, who moved
with tents, cameras and projectors to show their wares to hungry
audiences across the country. Clearly, cinema had taken off. From
the urban to the rural areas, people switched from theatre to
cinema. In response to the growing demand, ‘picture palaces’ or
‘permanent cinema halls’ or theatres as we know them started to
appear in 1906–07. By 1909, within 15 years of the first film being
screened, there were more than 30 theatres in India. Audiences
were watching mostly American and European (largely French
art) films on these screens. Most of these were newsreels on, say,
the Boer War or the funeral of Queen Victoria.
The Birth and Evolution of Indian Cinema

There is some ambiguity about the first Indian feature film.
Chronologically, it seems to have been Pundalik, a religious film
released in 1912. It was directed by Nanabhai Govind Chitre,
Ram Chandra Gopal Torney and P.R. Tipnis, all of them be-
longed to Marathi theatre. However, Dhundiraj Govind Phalke is
crowned as the father of Indian cinema. He produced, directed,
processed and did everything to make the first proper Indian fea-
ture film, Raja Harishchandra. Unlike most film-makers of those
days Phalke did not have the westernised audience in mind. His
vision was to use the medium to narrate an Indian story to an
Indian audience. Raja Harishchandra was released on 21 April
1913, and needless to say, became a great hit. It went on to be
released in 20 versions and in eight languages.
The importance of this film is not its position in India’s chron-
ological film history, but in the three important things it signi-
fied. First, the mass of the audience was Indian and, therefore,
making a film for Indians would get more people involved and
interested. Second, Indians like to be told a story they are familiar
with. At that time, mythology provided the basic fare. Everyone
knew the story of Raja Harishchandra. In fact, for a large chunk
FILM 177
of the illiterate audience, the explanatory texts in Hindi, Urdu

and English made no sense. The live accompaniment of text and
chanting did. And that is the third point: song and dance have
been an integral part of cinema’s narrative form from the very
beginning. The narrative form of Indian films was influenced
by mythology. Earlier they were made into plays, with song and
dance as an essential part of the narrative. Films followed the
narrative style of drama. Indian audiences, long used to it, were
completely comfortable watching it on screen. This is pertinent.
Many Indians feels sheepish about the songs and dances in our
movies, but there is a historical context to them. For generations,
storytelling in India has been a combination of the spoken word,
song and dance.
The Studio Years

Soon Phalke set up his own studio, The Hindustan Films Cinema
Company. He followed up with several mythologicals like Bhas-
masur Mohini and Kaliya Mardan. Several other studios came up.
There was Ardeshir Irani’s Star Film Company, R.S. Prakash’s Star
of the East Film Company in Madras, Rewashankar Pancholi’s
Empire Film Distributors in Karachi and Lahore, among others.
By the beginning of the 1920s, the pioneering phase was over and
the business had begun in earnest. Studios vied with one another
for actors, actresses, storywriters and lyricists. By 1923, an en-
tertainment tax at 12.5 per cent was levied on films in Bombay.
By 1927, a few film magazines—Movie Mirror (Madras); Kinema
(Bombay) and Photoplay (Calcutta)—were also launched. Bom-
bay, Madras and Calcutta were beginning to dominate the action
in Indian cinema.
At this point in time only 15 per cent of the films being dis-
tributed in India were Indian. The rest were foreign, of which
more than 90 per cent were American. World War I had almost
killed European cinema, leaving the field wide open to Holly-
wood. To counter these ‘American imports’ with censorship,
the English government appointed The Indian Cinematograph
Committee. It published its report in 1927–28. The report did
not recommend preferential treatment for British films. Instead,
it suggested a series of measures to promote Indian films. These
were: financial incentives to producers, the abolition of raw stock

duty and a reduction in entertainment tax. The British adminis-
tration just ignored the report. As luck would have it, successive
governments did the same and the film industry never did get the
hearing it deserved till 1998.
Let us go back to 1931 when Alam Ara, the first talkies, was
released. It was one among 28 films made that year. The break-
up of these films gives an insight into that time: 23 of these were
in Hindi, four in Bengali and one in Tamil. Bombay was already
becoming the centre of the cinema business. By the 1940s, films
were a proper business with Bombay Talkies, Prabhat and Wadia
Movietone, among the top film companies. The corporatisation
did not take away from the joy of cinema if one goes by the mate-
rial from the period.
The Fun of the 1940s

It was an exciting time to be in films, whether as an actor, a writer,
a lyricist or even as a journalist. It was an informal world where
intellectual bonding mattered more than money or connections.
Many financiers and producers would actually put up writers and
actors in their homes till they ‘made it’. Many actors started their
own companies. Ashok Kumar, for example, broke away with a
few of the employees of the top-rated Bombay Talkies, to form
Filmistan.
Bombay became very much like Hollywood, a rich cauldron of
intellectual, sexual and creative energy that kept the dream fac-
tories going. It is clear from much of the writing of that time, or
even from conversations with people from that era, that cinema
was one of the few progressive/modern bastions in the country.
Everybody—irrespective of religion, political leanings, national-
ity or social background—found a place in this world. There were
courtesans and their daughters who played the female roles that
‘respectable’ women did not. There were Leftists, Right-wingers
and sons of rich families who financed the films as also direc-
tors and actors from Germany, England and Russia, among other
countries.25
They enjoyed the creative process thoroughly, yet it was clear
that making films was a business. The system worked like a
FILM 179
well-oiled machine. Writers and actors and all the rest were on
the payrolls of major studios. Most were modelled on the Euro-
pean or American film industry, which were organised. If some-
one wanted to make films, they formed a studio, hired lots of
writers, lyricists, actors and actresses and churned out films. The
best studios were the best paymasters with the best staff—be it in
acting or writing or making music. For example, the famous Hin-
di novelist, Munshi Premchand, was hired by Ajanta Cinetone
as a scenarist for a salary of `8,000 per year—huge, going by the
standards of 1934.
A film was budgeted once a studio decided on it. Amrit Shah,
who worked with Bimal Roy from 1955–68, remembers that he
would add 10 per cent extra for unforeseen expenses after the
budgeting. The studio then split up the budget among the distrib-
utors of the various territories that India was divided into. For in-
stance, Delhi would pay 20 per cent of it. The ratio remained the
same for decades. The agreements between the distributor and
the studio were based either on minimum guarantees, advance
or on commission or on a combination of all the three (refer to
‘The Way the Business Works’). The usual distribution agreement
was minimum guarantee (MG) plus cost of print. Once that was
in place, work on a film began.
The Break-up of the Studio System

These fun years did not, however, last long. From the mid-1940s
onto the late-1990s, the film industry went through the rough-
est possible patch any business can. The wonder is that it sur-
vived and is doing so well. By 1944, the studio system had started
breaking up. Bloated with war profits, financiers tried to launder
their money through the studio system. Star salaries and budgets
got bigger and as did the egos. Breakaways became more com-
mon. Things started changing in other ways too. In 1949, post
Independence, entertainment tax was raised to 50 per cent in the
Central Provinces and to 75 per cent in West Bengal. In the same
year, the government appointed a committee under S.K. Patil to
report on all aspects of cinema. In 1951 (and this is pertinent),
the committee reported on the shift away from the studio system
towards independents. It noted the entry of black money and the
star system into films. This may sound familiar, but remember
this was the first time anyone was pointing it out.
The committee recommended major state investment in films,
the setting up of a film finance corporation, a film institute and
film archives. The report, like others before it, was ignored for
more than a decade. Some of the recommendations were finally
implemented in 1960 with the setting up of the Film Finance
Corporation, a film institute at Poona (now Pune), The Institute
for Film Technology in Madras and The Hindustan Photo Film
Manufacturing Company. Later, in 1965, the National Film Ar-
chive of India was also set up in Poona. Many of these moves
along with others—canalising imports of raw stock through the
State Trading Corporation (STC) and later the Film Finance Cor-
poration (FFC), and censorship—increased the government’s
hold on the film industry.
The Messy 1970s and 1980s

These were arguably the worst years for Indian cinema. That is
not necessarily a comment on the quality of films made, but on
the state of the business. The break-up of the studio system had
led to financial and systemic chaos that the film industry had yet
to recover from. Studios of that time hired employees who would
turn out about half-a-dozen films over a year or two. This spread
the risk of making films, helping them cover a bad film’s losses
with the gains from a good one. With the break-up of the studios,
many individuals became producers. There were now numerous
producers bearing the individual risks of making one film each
instead of a handful of studios bearing the collective risk of 5–10
films each. This fragmentation changed the economics of the
game in many ways.
The Financing
The first thing that changed was the colour of money coming into
the industry. Since there was no industry status and, therefore, no
institutional finance, most of the money flowing into the industry
came from people who had a lot of black money that they wanted
FILM 181
to park.26 The estimates of unaccounted money range from 25–50

per cent of the total money floating around in the industry. Most
producers did not question where the money came from because
they were desperate.
The interest rates that distributors and producers were paying
on this money could range from 48–60 per cent per annum. The
people making the films agreed to pay them because the risks of
the business had gone up dramatically. Anybody putting their
money in a film had a 2–3 per cent chance of making profits. It
was like gambling with high stakes. The returns were stupendous
if the film became a mega hit. It may be argued that earlier too
black money could have flowed into the studio system—but the
proportion must have been minuscule. In the 1940s, studios op-
erated on salaries and cheques just like regular companies did.
It was not so easy to put black money past them. In the 1960s,
1970s and 1980s, it seems that the only time cheques were issued
was when raw stock was purchased and excise duty was paid on
completion.
When a producer announced a film, depending on his star
cast, not the story or the director, distributors would line up to
pay an advance.27 A Raj Kapoor or a Yash Chopra had no problem
getting money because they usually got the big stars who ensured
a basic collection at the ticket windows. If Amitabh Bachchan
starred in the film, it meant that people would flock to see the
film at least for 2–3 weeks, if not more. The chances of recover-
ing costs and making more money were higher than when the
cast was completely unknown. That is the reason he was called
a ‘one-man-industry’. Also, filmmakers like Chopra or produc-
ers like Gulshan Rai found it easier to raise money because they
had—and still have—a good sense of what is popular. It was Yash
Chopra’s instincts that the financiers were betting on.28
If a smaller producer announced a film with relatively un-
known actors, he had a tough time raising money. Such produc-
ers would raise money on their own, through financiers; shoot
a few reels and show these to the distributor. If the latter liked
what he saw, he would agree to pay an advance for the film. The
shooting of the film would begin, again. Some of this money was
borrowed, some came from the distributor’s own pocket. The
glamour and the need to be associated with film-land, in spite
of its endemic business problems, were so high that money kept
pouring in. Unlike the men who put their money in the old studi-
os, these new financiers wanted to dictate terms on scripts, stars,
directors, music and everything else. The high risk of making a
film had killed creativity to some extent, this only added to it.
The Star System and Formula

The words ‘formula’ and ‘star system’ were born. ‘Formula’ was
the safest kind of film to make. What the formula was, depended
on the trend at that time. If romantic films were doing well then,
then romance was the formula; if action movies were all the rage,
then action it was. Nobody wanted to take a risk with an un-
known subject or stars, certainly not the distributors who were
bankrolling the film.
It was not as if experiments did not happen. These, however,
were few and usually financed by the government through the
National Film Development Corporation (NFDC). The ‘parallel’
cinema movement was the result. Even that had its caste system.
Actors like Shabana Azmi, Om Puri and Naseeruddin Shah—the
icons of parallel cinema—were a must if the film sought state
funding. The economics of the business had the disastrous effect
of choking creativity.
As for the ‘star system’, that too was as much a result of the
economics. If actors like Rajesh Khanna (at the peak of his star-
dom) or Amitabh Bachchan were signed on, it did not matter
if the film was bad or delayed: it was financed. So stars became
very important. This is something that happens in Hollywood
too; only it is more structured. If Julia Roberts, a popular Hol-
lywood actress, is a box-office draw, the market chases her and
everybody wants her in his/her film and prices do get pushed up.
However, when she signs on, she reports to a studio and is under
contract to complete the film. She has to be totally professional
about coming on time, completing the film and so on. In India,
except for the odd individuals with impeccable professional cre-
dentials, such as Amitabh Bachchan, things like punctuality and
a respect for deadlines went out of the window from the 1960s
onwards. Delays and protracted shooting schedules resulting in
higher costs were endemic.
Over the decades, the clamour to grant industry status to films
was becoming louder. It had, however, become a chicken-and-egg
FILM 183
situation. Since there was no institutional finance, producers de-

pended on stars to pull in the money from dodgy financiers. This
in turn meant low creativity, a bad product and an unprofessional
system. It also meant a risky, loss-making business. According to
one estimate, barely 2 per cent of the 763 films released in 1982
were mega hits, 16 per cent were moderate successes and 12 per
cent broke even. Of all the films released that year 70 per cent
sank without a trace, along with the billions of rupees that must
have gone into making them. The bottomline—films were an un-
attractive investment for a bank even if the business was given
industry status.
The studios of the past did not just ‘put together’ the film.
They aggregated the risk. When 10 films are made at the same
time, their budgets, subjects and artistes would vary. A studio
could make two large-budget formula-based films, three me-
dium budget films and try several smaller, more experimental
ventures. The risk was spread across a clutch of products. Some
would work, others wouldn’t; leaving the studio to either break-
even or eventually make a profit. From the 1950s onwards, indi-
viduals increasingly began bearing the risk. Depending on one’s
point of view, either the risk was greater or their capacity to bear
it was lower. Since they could make only one product there was
no portfolio and—hence—no de-risking. Plus, since there was
no money to put in more than one product, they depended on
only one film.
The Lack of Alternate Revenues

Add to this the complete lack of alternative revenue streams. Ex-
cept for theatres, there were no other ways for producers, dis-
tributors and financiers to recover their money. The overseas
market—with some exceptions—had a patchy record. Satyajit
Ray’s Pather Panchali had a successful 226-day run at Playhouse
on Fifth Avenue in New York, breaking a 30-year record for for-
eign releases in the US. Raj Kapoor had similar success in Russia.
None of this translated into huge business for the industry since
marketing and distribution remained dollar-intensive. In those
days of foreign-exchange shortages, Indian filmmakers could not
develop the overseas markets. Most producers sold their overseas
rights for a song to companies like Eros International. In 1982,
the only year for which this figure is available, the overseas mar-
ket brought in just `146 million.
Music companies, another source of revenues later, hardly
paid anything since HMV (now Saregama) was a virtual mo-
nopoly. As for theatres in the 1980s, they were dying. Land
prices were high, there were impractical rules for cinema halls,
and there was an entertainment tax of anywhere between 50–80
per cent, depending on the state. Theatre owners or exhibitors
charged as much as 50–60 per cent of a film’s collections as rent
and yet they could not make money. In order to do that, they
had to either under-declare revenues or make do with very low
returns—anywhere between 3–5 per cent—on their investment.
In cities like Mumbai or Delhi, where land prices are high, most
chose to morph into shopping complexes. Others ignored the
need to renovate, maintain clean toilets, paint or put air condi-
tioning systems.
As a result, the number of theatres together with the theatre-
going habit, especially in big cities, went into a long decline.
Between 1989 and 1993, the number of theatres fell from 13,355
to 13,001. According to the NRS data29, the number of cinemago-
ers has been falling from the late 1980s. While the steep decline
steadied after the 1990s, it has nevertheless continued to fall for
a long time. According to IRS 2008 figures, the number of peo-
ple cinema reached across urban and rural India fell by 6.2 per
cent from 2005 through to 2008. It has, however, started climbing
since then. Currently cinema reaches about 13 per cent of the
Indian population.30 (See Figure 0.1c.)
New revenue streams such as cable or video did come up in
the 1980s. However, instead of adding to a film’s revenues, they
took away from it. Cable TV in India began on the back of video
piracy. The early cable operators hooked entire buildings onto
one VCR and aired the latest Hindi or English film (refer to the
Chapter 2—Television). This hit film revenues in two ways. One,
it reduced the walk-ins into a theatre thereby reducing box-office
revenues. Two, it did not bring in the royalties that screening
old or new films on television usually entails. This holds true
even now. The latest hits are shown on local cable TV channels.
Nobody pays for these; they generate advertising in multiples of
tens of millions, none of which ever gets passed on to the film
industry.
FILM 185
It is not as if the government or progressive minds within the

industry were not aware of these problems. Right from the S.K.
Patil Committee Report in 1951, to the Estimates Committee
in 1973–74, and later, the Working Group on a National Film
Policy in 1980, each group had referred to these. They repeatedly
stressed the need to give industry status to the sector and allow
for institutional financing to be made available through banks.
Some of the 1980 committee’s remarks are telling. ‘Popular enter-
tainment films have to be liberated from the over-dependence on
standard box-office ingredients. These films should also provide
an opportunity for creative expression. This can only be done if
the production of popular films is freed from the clutches of fi-
nanciers.’ Earlier reports had pointed to the entry of black money
in films. The evidence was there and the solution was obvious as
well but nothing was done.
The Glimmer of a New Beginning (The 1990s)

By the end of the 1980s, the industry was in extremely bad shape.
When satellite television hit India in 1991, the mood was de-
spondent. However, the industry was destined to go through
more before things changed.
A Brief Respite
For a brief period things changed: partly because the industry
found innovative (for that time) ways out of its conundrum, and
partly because the market had altered in four ways.
One, due to cable TV, video and later satellite television, films
had competition for the first time. Till the mid-1980s, films had—
for better or for worse—a captive audience. People had no other
avenue for entertainment except films. There was one television
channel and one radio station. The competition for the viewer’s
time had begun, and the viewer was choosing to watch a pirated
film at home rather than visit a dirty, smelly theatre. His attention
span too had reduced because he had more options. He was less
likely to sit through a bad movie even if it had big stars.
Two, by this time Amitabh Bachchan, the last of the big stars,
was on the decline. In fact, he retired (but only for a bit) after
Khuda Gawah (1992). There was no other major star on the hori-
zon; at least nobody who could attract both financiers and audi-
ences the way Amitabh Bachchan or Rajesh Khanna had.
Three, video and cable TV cut the time a film had to recover
its money—in the theatres—to less than half. Earlier, distributors
and exhibitors could wait for word-of-mouth to catch on by the
second week of a film’s release. If it clicked they could then keep
it in the theatres for 10–12 weeks. However, by this time, video
pirates leaked prints of the film quickly. These were then picked
up by cable operators and aired into thousands of homes. This
killed a lot of potential revenues and meant that a film had just
2–3 weeks to recover its cost and make some money.
And four, costs had gone out of hand. In 1982, a really expen-
sive film cost `20 million to make. By 1993, this figure had gone
up to `30 to `50 million. These figures may seem small compared
to the budgets of some recent releases, but they were huge num-
bers then especially since there was no other way of recovering
this money except through theatres. The theatres in turn were in
no shape to welcome audiences. Most had reverted to a rental
system by then, so they did not care whether the audience turned
up or not.
Clearly, things had reached some kind of nadir. The film in-
dustry did react—and with amazing chutzpah for that time. It
did three things:
Discovering music The first was to use the music more

effectively. By this time the music industry was booming.
Music companies were vying with one another to pay ad-
vances to filmmakers for music rights (refer to the chap-
ter on Music). The rights to Subhash Ghai’s film, Khal-
nayak, were sold for a reported `10 million. This became
a crucial source of revenue/working capital. Other film-
makers tried to get in film advertising, and sponsors for
some scenes or songs, so that some of the costs could be
taken care of. The fact that these two—sponsorship and
music—could cover part of the cost, was a boon to many
filmmakers. It not only saved them interest but also got
the film free promotion as a result of the tie-ins with mu-
sic or a brand.
FILM 187
Marketing comes to the movies The second was the use

of some very rudimentary marketing techniques that had
never before been used by the film industry. Since music
was the best way to draw audiences, it became common
to release it a few months before the film—instead of after
the film’s release. The ‘Ek do teen’ song from Tezaab, for
instance, played a huge role in making the film a hit in
1988. Other tactics such as teaser campaigns, promotions,
offering free gifts, story contests and even advertising the
film heavily, were also being used. From almost nothing,
producers started spending roughly 10 per cent of a film’s
budget on promotion. Earlier, it was only the distributor
who spent on radio spots, posters or trailers.
The carpet bombing on distribution Piracy, competition
from other media and short attention spans meant that
the amount of time within which a film had to recover
its money had been cut short. Therefore, the pressure to
recover it quickly within the first weeks increased. So, it
made sense to release the film in a burst in a large num-
ber of theatres. This is common in the US. By doing so, a
filmmaker pulled in a major chunk of potential viewers
before a film’s video-copy came into circulation. It also
did not allow negative word-of-mouth to catch on. Mov-
ies like Hum and Khuda Gawah were released in 450–500
theatres nationwide: against the average of 200 of that
time. Releasing them simultaneously in so many theatres
ensured a huge ‘initial’ or the first rush of viewers walk-
ing in, given that the pre-release marketing was good.
This was an expensive strategy, because every additional
print of the film cost more than `60,000 and 450 theatres
meant 450 prints.
The Birth of Alternative Revenue Streams

Many of these moves helped ease the pressure on revenues. By the
late 1990s, music, overseas markets and satellite television emerged
as major revenue streams, bringing some more good news. The
music of a really big-budget film could bring in as much as 25–30
per cent of the film’s cost. Lagaan fetched a reported `60 million
from Sony Music; and Yaadein, `85 million.
By 1998, the overseas market had emerged as a major source
of income, bringing in 30 per cent or more of the total revenue
of the film at times. The television and Internet meant a smaller
world where the tastes of urban Indians matched those of Indians
living overseas. Both wanted a heavy dose of culture, weddings
and songs—all garnished with the right costumes and colour.
Neither wanted to know anything about the angst of the other
India. The overseas market came to everyone’s notice because of
the 1994 family saga, Hum Aapke Hain Kaun, which did very well
in the UK. It was followed by Dilwale Dulhania Le Jayenge(DDLJ,
1995), set partly in the UK and partly in India, followed by a host
of other films. DDLJ alone grossed about `200 million at the
overseas box-office against `500 million in India.31 Soon, films
like Taal, Pardes, Mohabbatein and Kuch Kuch Hota Hai were be-
ing made with the NRI audiences in mind.
Many of these films did well in semi-urban India, but really
made money in Indian metros, the UK and the US markets. It
was a market that looked set to grow. The 25 million Indians,
living overseas, had high purchasing power. The difference in the
currency value alone hiked what each ticket brought in. A film
ticket at US$ 10 was more profitable than the maximum of `80
to `100 that could be charged in India then. This translated into
increasingly more films with weddings and songs and dances
thrown in. Note that none of the big local hits of the mid- to late-
1990s, Satya, Sarfarosh and Company, which used other themes,
did significant business overseas. The only other really big over-
seas hits were Mani Ratnam’s Dil Se and the Tamil, Muthu—both
for some unknown reason in Japan.
Cable and satellite broadcasters became big buyers of films,
bringing in roughly 10–15 per cent of a film’s revenues. Some
were sold for even more than that. Most broadcasters recovered
that money from advertising. If a channel paid `30 million to
screen Dil To Paagal Hai, most of this money could be recovered
through one or two telecasts of the film.
Finally, satiated with satellite television and the repeats of old
and new movies, audiences started coming back to the theatres.
That prompted theatre owners to begin refurbishing cinema
FILM 189
halls. It also meant that ticket prices rose—to as much as `200 in

some theatres.
By 2000, music, satellite television and the overseas mar-
ket were totting up roughly 70 per cent of a film’s revenues. It
meant a fundamental shift in the way filmmakers thought, and
producers planned. It also meant filmmakers could take more
risks—creatively and financially: financially, because the busi-
ness seemed to be de-risked; and creatively, because smaller,
offbeat subjects or films like the 2000 release Astitva that ex-
plored a theme with limited appeal, could be made.32 Earlier
Astitva would have probably have had a weak run for a week
in some seedy theatre. Instead it now ran to packed houses in
smaller, 50–100-seat theatres.
The Hidden Devils

A lot of this apparent ‘de-risking’ and growth drew a welcome
and organised interest in the film industry. The government, con-
sultants, analysts, investment bankers and foreign investors all
turned the spotlight on Indian films.
First was the announcement granting the business industry
status in mid-1998.33 This meant that film firms could corporat-
ise, lobby for organised funding from banks, raise money and in
general operate just like any other industry with its own lobby
groups and demands for reduction in entertainment taxes and
so on.
Around the same time came a FICCI conference on the enter-
tainment business. This was followed by the decision to allow 100
per cent foreign direct investment in films. Later tax-free mul-
tiplexes too were encouraged. Meanwhile, the Indian Banking
Association announced norms for film financing. All this meant
that banks and financial institutions could now lend to the film
industry.
There was, through 2000 and 2001, a very positive air sur-
rounding the industry. This was evident at the FICCI and CII
conferences on the business.34 All this hoopla impacted filmmak-
ers too. Budgets went up in expectation of the easy finance and
increased revenues. So, did the price for music, satellite and
overseas rights. A lot of this well-meaning excitement missed

two things.
The inequity in risk bearing The first was the inherent

inequity in the way films were still being made—take
Baba (2002) as a case in point. According to reports, the
`100-million film sold its domestic theatrical rights to
150 theatres in the four southern states for `330 million.
Overseas rights were sold for another `80 million and
music for `30 million. Add in product endorsements
worth `60 million. The distributors, music companies
and overseas buyers bought the film based on some
rushes.
Even before its release, Baba had made an estimated
profit of `400 million, without anybody having seen it.
However—and this is very pertinent—the profit went
only to a handful of people, in this case, to the film’s actor,
Rajnikanth himself, since he was also the producer. All
the theatres that picked up the film, the music company
and the one that bought the overseas rights, lost money
when the film failed.35
Now, multiply the Baba experience across five decades
and thousands of films. Since distributors advanced
money to producers (refer to ‘The 1970s and 1980s’),
there was an inherent inequity in the way Indian films
were financed, distributed and sold. The entire risk was
being borne by the distributor and/or the theatre owners.
It was routine for theatre owners and distributors to
under-declare revenues for good films to make up the
losses on the terrible ones.36
The fragmentation of India Second, from the late 1990s
onward, sharp schisms had cropped up in Indian film
viewing habits. The divide between A and B class India
had become wider. The urban, upmarket viewer and the
overseas audience, both connected with, say, a Dil Chahta
Hai (an urban slice of life story about three friends). The
rest of India could not. Audiences in semi-urban and ru-
ral India, which has over 50 per cent of the total thea-
tres, prefer conservative fare. The 2002 release, Ankhiyon
Se Goli Maare (an old-fashioned formula film), did twice
FILM 191
the business in the interior than it did in the cities. More

importantly, urban audiences were willing to pay `100
or more (against the average of `20) to watch something
that appealed to them, and in a good theatre. The market
was demanding more variety—in filmmaking, screening
and pricing of tickets. Many filmmakers missed the point
and continued to make one-theme-fits-all kind of films.
A bulk of the new investment went into trying to reach a
pan-Indian audience, at a time when there was none left.
As a result, movies started flopping. Music companies, over-

seas buyers and domestic distributors started losing money. Each
of them reacted by shunning the business. Additionally, satellite
channels such as Sony or Zee had paid very high prices for films
in 1995–96 when they were hungry for a spike in their ratings.
As viewers started getting hooked to soaps, there was no need to
throw so much money on films. At its best, a blockbuster such as
Kuch Kuch Hota Hai generated TVR of 11 and revenues, argu-
ably, in excess of `50 million when it was televised later. As the
reach of television increased, a hit show could do more on both
counts: TVRs and revenues. The result was that satellite channels
began buying under-production rights or libraries. Mukta Arts
sold its library—with blockbusters such as Karz, Karma and Ram
Lakhan among others—to Sony for `160 million in 2002. Sony
also bought the Indian satellite telecast rights for Lagaan after
watching the film, but before it was released and before it was
declared a hit.
The overseas dream soured, too, because greed and over-ex-
pectation hiked the acquisition cost for all films. Producers also
discovered, late in the day, that milking the overseas potential
needed marketing dollars. In a sub-billion-dollar, highly frag-
mented industry, not everybody had that. Yash Raj Films had
been the only one till then to set up its own distribution offices in
the UK and the US. Others still depended on shady distributors.
In addition there was piracy, especially on DVDs that were out
within the first week of the film’s release. Most Indian film com-
panies did not have the resources to fight it. That is why among
the hundreds of films made every year, the odd Lagaan, Kabhie
Khushi Kabhie Gham, Mohabbatein, Muthu and Taal remained
the only overseas successes.
However, the biggest blow was reserved for theatres. If pro-

ducers had greedily pushed all the new revenue sources too far,
distributors had done likewise. The bidding for films reached
some terrific highs in 2000–01. Distributors who paid advances
for Yaadein suffered heavy losses when the film did not do well.
As a result, 2002 turned out to be one of the worst years for the
film business. Even the most successful of films ended up with
margins of just 25–30 per cent as against the traditional 100 per
cent plus.
The Birth of a New Film Industry (2002–2006)

This churn in the business, combined with alterations in policy,
finally forced two structural changes on the Indian film industry
between 2002–2005:
Cleaning up the Finances

The first was that advances were out. This was the first and most
important structural change that the slowdown of 2002 brought
into the film industry. This meant that for the first time in 50
years, films were being bought after they are made, on a com-
mission basis. All the revenues and profits they earned started
being shared along the distribution chain—with exhibitors, dis-
tributors, producers—instead of just one man, the producer,
making money at the expense of everybody else. Therefore, film
companies and producers had to work hard at getting organised
finance. This could be through bank finance (to the extent of 50
per cent of the film’s cost), own resources, co-productions or pri-
vate equity, among other sources.
This need for organised money in turn forced consolidation.
This is because banks, venture capital firms and even private
equity firms, prefer not just companies but large companies. So
UTV, Yash Raj Films or Percept Picture Company, started sign-
ing deals with creative houses like Ram Gopal Verma’s or with
dozens of individual directors. This created a pipeline of films.
This consolidation at the production end gave these companies
both distribution and retail heft. Film companies started operating
FILM 193
like any other consumer product business; the greater the variety
and scale a company had, the greater its clout with retailers and
distributors.
This consolidation also worked across segments of the busi-
ness. Yash Raj Films forayed into music, home video, interna-
tional and domestic distribution. Reliance Big Entertainment
produces and retails films; it then got into domestic and interna-
tional distribution and international production.
This in turn forced some discipline on to the process of film-
making itself. UTV or Yash Raj Films insist on a written-and-
bound script before they discuss any project. This is then vetted.
The Industrial Development Bank of India (IDBI), which offers
financing for films, had an advisory committee of 12 people that
vetted scripts every quarter. The script is translated to screen-
play, shooting schedules, casting and dates; every detail about the
movie has to be put down on paper.
It is now standard for pre-production to take anywhere be-
tween 4–9 months, compared to a few days earlier. The idea is
to have every detail down on paper and have alternative plans or
shooting schedules for every scene—down to location and the
things needed there—completely organised, before the spend-
ing begins. The pre-production process would involve hardly a
dozen people, as against the scores that actual shooting would.
It makes sense to iron out the details before the company starts
spending money.
The Retail Revolution

The second important structural change was in retailing. Mul-
tiplexes, digital theatres and home video, the three major ways
in which consumers watch films, started attracting investments.
The impact of this change cannot be overemphasised. Remember
that cinema still reaches less than 10 per cent of Indians, so the
need for expanding the reach of cinema through more formats
is evident.
The formats which led the retail revolution are:
Multiplexes Half a dozen multiplex chains—Fun Repub-

lic, PVR Cinemas, Adlabs (now Big), Fame Cinemas and
Inox Leisure among others—came up across different

cities in India (and continue to sprout).37 In April 2013,
there were over 1,100 multiplex screens, according to an
analysis done by a broking house (see Table 3.2). That
makes it easier to screen and make money on all kinds of
films, from Race and Sivaji to Bheja Fry and Peepli Live.
This is because unlike a regular 1,200–1,700 seat theatre
with one screen, a multiplex has four or five screens with
200–400 seats each.
This gives the entire business a lot of flexibility. In the
first few weeks, a film such as 3 Idiots can be shown in
a 400-seater. Later, as collections start dipping, it can be
shifted to a smaller screen. On the other hand, an off-
beat film like Vicky Donor can be screened in a smaller
auditorium to start with. If it works, the number of shows
could be increased. The permutations and combinations
that a multiplex offers—to mix films, shows, timings and
prices—makes it easier to make money with even mediocre
films. This is because they can charge much more than
the national average of `30. The average ticket prices
(ATP) in multiplexes range between `150–200. PVR, for
instance, has the highest ATP among multiplex chains at
`170 per ticket sold. As a result, even with an occupancy
of between 30–50 per cent, most end up making a healthy
profit thanks to food and beverages and advertising (See
‘The Shape of the Business Now’ and Table 3.2). Since
ticket booking is computerised and transparent, there is
no leakage of revenue, an endemic problem earlier.
Digital theatres The logic for digitising theatres was sim-
ple: the greater the number of copies of a film print that
are released, the higher the chances of milking it in the
first few weeks. Ideally, a film should have 11,000 prints,
one for each screen in India38. At `60,000 to `70,000
per celluloid copy, this was not viable. An average film
released with 200–400 prints nationally, and a very big
one—such as an Om Shanti Om—would be released with
1,000 prints nationally. Once it exhausted all the business
in the top theatres, it moved to smaller theatres in big
cities and then to smaller towns. In the interim, piracy
FILM 195
soaked up all the potential business. When the prints did

reach these markets, they were scratchy and difficult to
watch.That is why the film going habit in small towns had
been falling.
Digital technology, meaning a server and a digital pro-
jector, cost anywhere between `1 to `10 million to install
in 2003. This enabled the theatre to show the film from a
digital file. This could be a hard disc that is changed every
week, or the film could be received via satellite and stored
on the hard disc of the computer. It is then played for an
agreed number of times before the file disintegrates. The
first copy, from 35 mm to digital, costs about `100,000 to
`200,000. Every subsequent copy on a hard disc retains
the visual quality of the original and costs about `2,000 to
`3,000. It ensures that every screen in the country can get
the film on ‘first day, first show’—killing piracy, pushing
up attendance and getting more revenues back into the
industry.
For years, nobody, in Hollywood or anywhere else,
wanted to take the plunge. That is because while everyone
gained, nobody wanted to make the investment. In China
and several other countries, governments decided on dig-
itising theatres and the projects moved. In India, in June
2003, Adlabs began seeding theatres with its `1 million
digital system. In September 2003, it floated Mukta Ad-
labs Digital Exhibition in a joint venture with Subhash
Ghai’s Mukta Arts to seed theatres. It quickly signed on
over 50 theatres, either on a revenue-share or a lease ba-
sis. In some cases, the equipment was sold outright. Then
came Dhirubhai Shah’s Time Cinemas followed by the
Sushilkumar Agrawal’s Ultra Group. While the models
were different the idea was the same: getting moribund
B&C class theatres up and running.
One hundred and thirty theatres later, in January 2004,
the results were startling. In digitised theatres in Maha-
rashtra, Punjab, Uttar Pradesh and West Bengal, average
occupancy had jumped from 8–10 per cent to 20–50 per
cent. On good days it could go up to 100 per cent. Audi-
ences were coming back to the theatres. By May 2005,
about half a dozen digital cinema projects were underway.
Though the Mukta-Adlabs project petered at some point

it set the tone for digital cinema in India.
The area of contention is usually the choice of technol-
ogy. The essential difference in the quality and cost of a
digital cinema solution is the projector, since servers and
satellites costs are fairly standard. The globally accepted
DLP Technology from Texas Instruments is licenced to
several projector companies—Barco, Panasonic, Chris-
tie’s. However, Hollywood approves, through its Digital
Cinema Initiative or DCI, only very high-end DLP pro-
jectors.39 A DCI-approved DLP Cinema Projector could
push the cost of the entire solution up to `3–4 million.40
On the other hand a non-DCI compliant projector costs
between `1 to `1.2 million. These are figures for 2012.
In 2005, the gap between a DCI-compliant and a non-
DCI compliant solution was ten times. Not surprisingly
Mukta-Adlabs chose the non-DCI route. The difference,
incidentally, is not just in the cost but also the fact that
only DCI compliant theatres can play Hollywood films.
As a result the Mukta-Adlabs solution and most of In-
dia’s digital cinemas, which are non-DCI compliant, were
branded e-cinemas. The technology, nevertheless, took
off. There are several business models around digitisation
with theatre owners paying for each film screened or for
every ‘virtual print’. In either case everything they earn
is shown on the books and recorded as collection. The
software will not allow them to decrypt the film file other-
wise. This means the money comes back into the industry,
as in the case of multiplexes.
In April 2013 there were 6,000 single-screen digital
theatres in India. (See Table 3.2). To this add the multi-
plexes, many of which are digitising rapidly. According to
one estimate 80–90 per cent of India’s 10,000-odd screens
are now digital. As a result most films usually release with
at least 70–80 per cent of digital prints. A theatre that is
digital can also screen celluloid films since all theatres re-
tain the equipment to do so.
Home video The other part of the retail revolution was
home video. It is defined as entertainment on any device
FILM 197
than can be seen at home. Currently, this includes primarily

VCDs and DVDs. Globally and in India too home video,
which brought in 15–20 per cent maybe more of a film’s
revenues is no longer considered that important. This is
because of the options such as pay-per-view, online view-
ing on YouTube and other sites.
The Changing Eco-system (2006–2009)

The major changes between 2006–2009 that the last edition cap-
tured in more detail were:
Production
Domestic co-production A handful of production com-
panies had been working hard at scaling up, an impera-
tive in the business. They tried listing and raising money,
looked at co-productions that increase the number of
films they can make, did co-financing deals or tied up
with smaller production companies. For instance, Net-
work 18’s film firm, Studio18 (Now Viacom18 Motion
Pictures), tied-up with Shri Asthavinayak Cine Vision
Limited (SACVL) in 2006. The duo was to produce four
films with a total budget of `1 billion, 40 per cent of
which was to be funded by SACVL. Co-production, co-
financing or tie-ups help ensure that production compa-
nies have a slate of films ready for the trade every year,
a great negotiating tool. They mitigate the natural risks
in the entertainment business. Co-production also instils
confidence in investors looking at parking funds in the
film business.
International co-production Several countries—the
UK, Italy, Germany and Brazil among them signed co-
production treaties with India. These treaties help access
international financing, location, expertise and a wider
audience. The cost-competitive post-production and ani-
mation sectors in India also get business in the process.
The rise of the small film In the days of the 1,000-seater

theatre, small movies had a tough time finding buyers.
Now with an average of 200–300 seats a screen and a
more evolved audience, small movies were making a
profitable comeback (see ‘The Past’). Films like Bheja Fry,
Happy Days, Mantra, Anasuya and Mee Shreyobhilashi,
were among the small films that did well. Bheja Fry, for
instance, was made at a cost of `6 million and netted `120
million at the box office.41
The rise of language cinema In 2003, Sandeep Sawant’s
Marathi film Shwaas broke new ground by drawing
non-Maharashtrian audiences. It won the Golden Lotus
National Award in 2004 and was also India’s official en-
try to the 77th Academy Awards. Other Marathi films
such as Not Only Mrs Raut, Anahat and Uttarayan too
won applause. Like Marathi, films in various languages—
Bangla, Bhojpuri or even Awadhi—are rising after a long
hiatus.
Marketing
The major changes in marketing were:
Rising marketing costs In 2007, more than 35 per cent
of a film’s average theatrical cost of US$ 106 million for
the large studios in Hollywood was spent on marketing.
In India too, the marketing budget was around 30–40 per
cent of the total budget, though the base was small at any-
where between `50 million to `500 million as the cost of
a film. Marketing costs had been rising by 10–20 per cent
every year because most companies ‘front load the gross-
es,’ in trade parlance. The idea is to reach as many people
as possible in the first—or at most the second—week to
avoid piracy and negative word-of-mouth. ‘More than 90
per cent of a film’s box-office gross comes in the first four
weeks, after that just 10 per cent would trickle in,’ says
Tushar Dhingra, formerly with Big Cinemas. This means
spending a lot on creating awareness, hype, demand and
FILM 199
pull for the film and then on ensuring that it hits the
maximum screens possible. These days the marketing
blitzkrieg builds up months in advance of a film’s release.
Most big films release with about 2,000–4,000 prints na-
tionally.42 The 2012 blockbuster Dabangg2, for instance,
released across 3,500 screens in India and 450 screens in-
ternationally.
Co-branding or brand tie-ins Co-branding started be-
coming one of the biggest tools in a film company’s kitty
to mitigate the rising costs of marketing a film. In 2007,
Hindustan Unilever associated with Krrish to market
its largest selling soap brand—Lifebuoy. In a deal like
this, usually the company which associates with the film
spends on the media in exchange for the right to use char-
acters or other elements from the film in its advertising
message. This means free media for the film. In the case
of Kkrish–Lifebuoy, it also involved printing pictures of
Kkrish’s character on its Lifebuoy packs and giving away
merchandise based on the film. In 2006, Lenovo tied-up
with director Madhur Bhandarkar to sponsor Corporate,
where actress Bipasha Basu was seen endorsing Lenovo’s
product portfolio.
The use of Internet and mobile for film marketing At about
127 million Internet and over 867 million mobile subscrib-
ers both the media are a great way to connect with the
young and well-to-do who frequent multiplexes. The Indi-
an film industry has been proactive in its use of the Internet
(and even the mobile) for marketing. Almost every major
film has a mobile partner, a web partner and a website.
Merchandising So far, merchandising has been more
about creating hype for the film and the brand associated
with it, rather than about earning any real revenue. The at-
tempts at merchandising therefore remain limited. In 2007,
Shoppers’ Stop entered into a marketing agreement with
the makers of Om Shanti Om for its apparel rights. The tie-
up marked the launch of four new brands for Shoppers’
Stop. Other films such as Ra.One have used it too.

The Value Chain
There are three elements to the film value chain: production, dis-
tribution and retail:
Production
Anyone who has an idea for a film needs money and people to put
it together. The person with an idea could be a rank outsider and
may not necessarily make the film. Or, it could be someone from
within the industry—a director, financier, an actor or a writer.
These days it is typical to approach a film company such as Yash
Raj Films or UTV with the idea or a script and take it from there.
The basic processes involved would be pre-production planning,
which could take 4–6 months to get right. This includes scouting
for locations, costumes, deciding on the cast, briefing them and
doing everything that can be done before the camera starts rolling.
Distribution
There are two categories of agreements here, the one between
the distributor and the producer/film company and the other be-
tween the distributor and the exhibitor or theatre owner. These
arrangements have remained the same for as long as anyone as-
sociated with the industry can remember. ‘What has probably
changed is that the actual numbers involved have gone up with
the cost of film making rising’, says accountant Amrit Shah.43 So
has the number of territories. While geographically, India is di-
vided into 14 territories, the overseas market and satellite televi-
sion give enough returns to be classified as separate territories.44
The agreements between the distributor and producer Any of
the following four types of agreements between distributors
and film companies depends on the film, the producer, the dis-
tributor, the territory he owns and the expectation each of them
has from the film:
FILM 201
Minimum guarantee (MG) It is also referred to as Royalty

MG in industry lingo. If a distributor buys the rights to
screen Kahanii at `10 million for the Mumbai territory,
the price is usually based on or is a percentage of the pro-
duction cost of the film.45 Usually, about 30–40 per cent—
maybe more—is paid in advance and the rest against the
first print. In addition, the distributor will bear the cost
of prints in his area. If the film is being released in 100
theatres in Mumbai and there is a need to make 75 prints,
he will bear the `60,000 or so each print costs, plus the
cost of publicity. Assume that his total bill for screening
the film is `20 million. Assume also that the agreement
allows him to charge the producer a 20 per cent commis-
sion. If there is more money coming in after his expenses
(` 20 million) plus his commission (` 2 million) has been
recovered, the ‘overflow’ (in trade parlance), is split half-
way with the producer.
Advance If the distributor does not want to take a risk
then he will just advance the money to the producer. The
rest of the arrangement on prints, publicity and commis-
sion, remains the same. If the film does not make enough
money to cover the advance, then the producer has to re-
imburse the money to the distributor.
Commission Basis Under this agreement, the distribu-
tor does not take any risk. He just takes the film and re-
leases it throughout his territory for maybe a 10 per cent
commission on the takings. The entire risk is borne by
the producer. This is now becoming the more popular
form of distribution. Earlier in 2009 a stand-off between
multiplex owners and production companies resulted in
the following arrangement for revenue share between
production companies/producers and multiplex owners.
Producers/production companies will get 50 per cent of
the revenue from ticket sales in week one, 42.5 per cent
in week two, 37.5 per cent in week three and 30 per cent
from the fourth week onwards. In case a movie collects
more than `175 million at the top six multiplex chains
(excluding single screen and independent multiplexes),
than producers would get 52.2 per cent in the first week,
45 per cent in the second week, 37.5 per cent in the third
week and 30 per cent from the fourth week onwards.There
is currently some wrangling going on over changing this
arrangement to improve the share multiplexes get.46
Outright The distributor pays a lump sum to the pro-
ducer and picks the film up for exploiting in his territory
for five years or so. After that, the rights for that terri-
tory will revert to the producer. This is usually done for a
Hindi film being distributed in, say, Tamil Nadu, where it
is difficult to determine how much it will really earn. ‘In
the old days,’ remembers Shah, ‘99 per cent of overseas
rights were sold outright, so there are no statements, no
accounts of how much the movies actually made there.’
The agreements between distributor and exhibitor (the theatre

owner) These could be of three types:
Theatre hire basis This essentially works like a fixed

rental. Assume that the maximum financial capacity of
a theatre is `1 million a week. If the thumb rule for that
area is 50 per cent, then the exhibitor will keep 50 per cent
of the full-house capacity and give the remaining to the
distributor. If the film collects `1.2 million, the exhibitor
keeps `500,000 and gives the remaining to the distribu-
tor. However, if the film collects `700,000 even then the
exhibitor will keep `500,000 and the distributor gets only
`200,000 that week. If the film does less than 50 per cent
of its full-house capacity, say, `400,000, the exhibitor’s
share is nevertheless `500,000. So the distributor will pay
him `100,000. However, in practice the distributor does
not pay the exhibitor immediately. The final settlement
takes place only when the accounts are squared off after
the film has been pulled out of the theatre.
Note that the capacity of the theatre is measured not in
number of seats but in terms of the money it can make.
That is because entertainment tax and local state rules
tend to create huge variations in ticket prices. Theatre hire
is the most popular way of letting out theatres, especially
in metros where ticket prices are very high so exhibitors
FILM 203
can make enough money if they get a fixed percentage of

peak capacity. It de-links the exhibitor’s fate from that of
the film completely. This is now changing. Many theatres
are willing to take a smaller hire charge but want a share
of revenues or overflows.
Percentage Basis This type of agreement is not used
much now, according to Shah. Under this agreement, the
exhibitor keeps a fixed percentage of 40–50 per cent of
the collections every week. If the collections are high, he
makes money, if not he doesn’t.
Fixed Hire Under this agreement, the exhibitor takes
all the risk. He pays the distributor a fixed amount every
week irrespective of the weekly collection. If the capacity
is `200,000, the fixed hire could be `100,000 a week. If
there is a surplus, he could share it with the distributor
depending on the terms of the agreement. Usually when
the film is given in the interiors of the country where it is
difficult to measure the capacity or estimate how popular
it could be, the distributor takes the safe way out and gives
it away on fixed hire. However, according to Shah, who
has handled thousands of cases of unpaid dues between
distributors, producers and exhibitors, this system has an
inherent scope for mischief. It is common for distributors
to take money in cash from the exhibitor and declare a
loss on paper in order to underpay the producer.
This is very common in Bihar, Uttar Pradesh and Pun-
jab where a bulk of the transactions are in cash and films
rarely show a profit. The exhibitors, especially in smaller
towns, have a monopoly. They probably own the only the-
atre in town so the film keeps making money for months
after the producer thinks it is out of the theatre. However,
all he sees is that collections were small, so after paying
the hire to the distributor, it seems that the theatre owner
has nothing left. There is little a distributor can do. Even
if there are three theatres, the owners/exhibitors could
get together and decide that they will pay only `100,000 a
week as fixed hire, so distributors too have no option but
to work with one of them.
To avoid leakage and other problems many film com-

panies such as UTV have got into film distribution to
have better control over the value chain.
Retail
The completed film is then either screened in theatres in India,
overseas, released on television, home video, available for stream-
ing on the net and in any other form of retail. Usually the other
retail formats get the film a month or so after the theatrical release
(detailed in ‘The Past’).
The Economics
Typically, the revenue streams (discussed in detail in the main
section and shown in Table 3.1) are:
• Theatre release
• Cable, satellite release
• Dubbed versions for regional or foreign markets
• DVD, VCD release
• Internet
• Pay-per-view on DTH
• Music rights
• Mobile rights for ringtones, wallpapers or clips
The main elements of cost (also discussed throughout the

main section) are:
• Production
• Artistes
• Distribution (including prints)
• Marketing
The Metrics
The main metrics in the film business would vary depending on
which part of the value chain a company operates in.
FILM 205
Walk-ins
Just as in any retail store, walk-ins are very important in multi-
plexes or film theatres. They determine not only the box-office
gross, but also how much food and beverages are sold and how
much premium advertisers attach to putting money into a thea-
tre or a chain of theatres. This translates into capacity utilisation.
For most film retail chains about 35–40 per cent utilisation com-
bined with robust food and beverage sales and advertising helps
to break even.
Average Ticket Prices

These are by far one of the lowest in India. The admission price
was US$ 7.96 in the US in 2012. In India the price has been inch-
ing toward US$ 3 in the metros. However, overall, it is about `30
per ticket or about 50 cents.
Box-office Gross
This is the total money that a film collects in theatres in a week or
a day. However, this is by no means the revenue of the film. The
entertainment tax and other taxes have to be deducted from this
figure to arrive at the net gross. Then the distributor and theatre
owner’s share has to be deducted to arrive at some real estimate
of what the film company has made. For a quick understanding
here is a rough guide. The production company typically would
get one-third the film’s gross. This is then added to all the other
revenues—such as home video, overseas, music, advertising and
so on to arrive at the total revenues for a film.
The Regulations
While there has been plenty of regulation of the film industry, most
of it has been centred on content. There has been very little on fi-
nancing, distribution or exhibition, areas in which it could have
helped the business. In fact, whenever there was any suggestion of
improving regulation to create a good business infrastructure for

the film industry, it has been ignored. Some cases, laws and his-
tory are outlined as follows:
The History
A brief look at how film regulation evolved in India:47
1918: The Indian Cinematograph Act, modelled on the

British Act, sets the terms for censorship and cin-
ema licencing.
1927–28: The Indian Cinematograph Committee (1927–28).
1932: The Motion Picture Society of India (taken over
by The Film Federation of India in 1951). Later,
different states formed their own motion picture
associations.
1943: State control on raw stock distribution. The De-
fence of India Act, 1971, is amended to force
all distributors to pay for and show the Indian
News Parade. Both these restrictions were re-
moved in 1946.
1944: The government appoints a Film Advisory
Committee.
1949: Films Division is set up and the Cinematograph
Act, 1952, amended. More importantly, entertain-
ment tax is raised to 50 per cent in the Central
Provinces and 75 per cent in West Bengal. The
S.K. Patil Committee is appointed.
1950: Jawaharlal Nehru announces a freeze on building
theatres; it is finally lifted in 1956.
1951: S.K. Patil Committee report on improving film fi-
nancing. Film Federation of India is set up. Film
censorship centralised under a Central Board lo-
cated in Mumbai.
1968: G.D. Khosla Committee Report on film censor-
ship. It criticises censorship norms saying that if the
censorship guidelines are strictly adhered to, not a
single film, Indian or Western, is likely to be certi-
fied. It sparks off a debate on whether censorship
violates our constitutional right to free speech.
FILM 207
1973–74: The Estimates Committee blames the government

for ignoring earlier enquiry committee reports
that suggested making institutional finance avail-
able to the industry. It points out that the result
had been the large-scale entry of black money into
the industry.
1980: FFC is merged with the Indian Motion Picture Ex-
port Corporation to become NFDC.
1980: The working group on national film policy points
out that the sector should be recognised as an in-
dustry and institutional finance be made available
through banks.
1982: Andhra Pradesh and Orissa give it industry status.
1984: Infringement of copyrights in films is made a cog-
nisable offence.
1994: The censor code is amended, following the song
Sarkailo Khatiya from Raja Babu.
Rights and Piracy48

A film is an amalgamation of various components and therefore,
legal rights. A movie consists of a script (which is a copyrighted
literary work), performance by the actors, the lyrics of a song
(which is also a copyrighted literary work), the music composi-
tion (copyrighted musical work), the recording of the song (cop-
yrighted sound recording), graphics and art (copyrighted artistic
work). Each of these elements constitutes a separate Intellectual
Property Right. This means a copyright is conferred on each by
the Indian Copyright Act, 1957. A producer must, therefore, first
obtain permission from all these rights owners, which would
merge into the final product that is the film.
Copyrights
The copyright in a cinematographic film is provided under The
Indian Copy-right Act. The author of a cinematographic film is
the producer thereof. The term of copyright in cinematographic
films is for 60 years from the beginning of the calendar year fol-
lowing the year in which the film is published. The copyright
does not subsist in a cinematographic film if a substantial part

of the film is an infringement of the copyright in any other work.
The owner of the copyright in the film has the exclusive right to:
1. Make a copy of the film, including a photograph of any

image forming part of the film.
2. Sell or give on hire or offer for sale or hire a copy of the
film regardless of whether it has been done earlier.
3. Communicate the film to the public through a theatrical
right (release in theatres) and broadcasting right (broad-
cast on television channels).
An infringement of cinematographic film is by means of copy-

ing the film on any medium by any means. Making another film
which resembles the earlier film does not fall within the expres-
sion of making a copy. The reproduction of a literary, dramatic,
musical or artistic work in the form of a cinematographic film
shall be deemed to be an infringing copy. Tests to determine the
infringement of a film were laid down by the Supreme Court of
India in R.G. Anand vs. Deluxe Films (1978) SCC 118. The follow-
ing principles were laid down:
1. There can be no copyright in an idea, principle, subject-

matter, themes, plots or historical or legendary facts and
violation of the copyright in such cases is confined to the
form, manner and arrangement and expression of the
idea by the author of the copyrighted work.
2. Where the same idea is being developed in a different
manner, it is manifest that the source being common,
similarities are bound to occur. In such a case, the courts
should determine whether or not the similarities are on
fundamental or substantial aspects of the mode of expres-
sion adopted in the copyrighted work. If the defendant’s
work is nothing but a literal imitation of the copyright-
ed work with some variations here and there, it would
amount to violation of the copyright. In other words, in
order to be actionable the copy must be a substantial and
material one which at once leads to the conclusion that
the defendant is guilty of an act of piracy.
FILM 209
3. The surest and safest test to determine whether or not

there has been a violation of copyright is to see if the read-
er, spectator or the viewer after having read or seen both
the works is clearly of the opinion and gets an unmistak-
able impression that the subsequent work appears to be a
copy of the original.
4. Where the theme is the same, but is presented and treated
differently so that the subsequent work becomes a com-
pletely new work, no question of violation of copyright
arises.
5. Where, however, apart from the similarities appearing in
the two works, there are also material and broad dissimi-
larities which negate the intention to copy the original and
the coincidences appearing in the two works are clearly
incidental, no infringement of the copyright comes into
existence.
6. Where, however, the question is of violation of the copy-
right of a stage-play by a film producer or a director, it
becomes more difficult for the plaintiff to prove piracy.
It is manifest that unlike a stage play, a film has a much
broader perspective, wider field and bigger background,
where the defendants can, by introducing a variety of in-
cidents, give a colour and complexion different from the
manner in which the copyrighted work has expressed the
idea. Even so, if the viewer after seeing the film gets a to-
tality of impression that the film is by and large a copy of
the original play, violation of the copyright may be said to
be proved.
Specific defences to infringement of Copyright in a cinemato-

graphic film are specified in The Indian Copyright Act.49 A com-
poser of a lyric, a musical work, cannot complain of infringement
of his copyright, if the owner of the cinematographic film causes
the lyric of music work which is part of the sound track of the
film to be heard in public for profit or otherwise. The composer,
however, retains the right of performing it, in public for profit,
otherwise.50There have, however, been significant changes to the
Copyright Act vis-a-vis music in films under an Amendment Act
passed in 2012. Please refer to Chapter 4—Music.
Piracy
Piracy of films is a major issue despite the various laws. This in-
cludes cable piracy as well as on VCD, LD, DVD, online or in
any other format. Films appear in rental libraries and on VCDs
almost as soon as they are released, and sometimes even before
that. Some amendments to the Cable Act in 2000 recognised the
fact that cable operators also require copyright licences for ex-
hibiting software on their networks and any breach was an of-
fence within the Act. Piracy also occurs through video parlours
and rental libraries, which do not have any basic permission or
licence to rent unless they use authorised versions. In 1984, the
Copyright Act was amended to combat piracy by extending the
provisions of the Act to video films and computer programmes.
The producers of records and video films are under statutory ob-
ligation to display certain information on the packaging and disc.
However, enforcement of copyright law continues to be inef-
fective. The central government has constituted a Copyright
Enforcement Advisory Council (CEAC) to review measures
for enforcement. A number of anti-piracy measures have been
adopted by various state governments. For instance, separate
cells have been set up in police headquarters.
A special mention must be made of the Tamil Nadu govern-
ment which included film pirates under the Goondas Act which
allows detention of the offender up to one year without trial and
further imposed heavy monetary fines on exhibitors of pirated
films. The Andhra Pradesh Film Chamber of Commerce has cre-
ated an anti-video piracy cell since May 2005, which is led by
a retired Superintendent of Police and which works in tandem
with the government to fight piracy. There is some role which is
also played by SCRIPT, the registered copyright society for In-
dian Producers of Films and Television (which plays a role simi-
lar to that of IPRS—Indian Performing Right Society Limited—
and PPL—Phonographic Performance Limited—for the music
industry; see Chapter 4—Music—for more details). The Courts
have also adopted a strict stand and construed provisions to as-
sist in tackling piracy.51
In response to issues of piracy in films52, the courts have taken
to issuing ‘John Doe’ orders (termed ‘Ashok Kumar’ order in India)
FILM 211
against existing as well as potential persons engaged in piracy. A

‘John Doe’ order is an import from civil law in the United King-
dom. It is employed widely as a means of copyright protection
in the United States and Canada. A ‘John Doe’ order operates as
an injunction against an anonymous defendant, that is a ‘John
Doe’ or an ‘Ashok Kumar’, that is, a defendant who is not known
to the petitioner at the time of filing. Such an order can be re-
lied on by the petitioner to restrain any person from engaging in
the activity barred by the order. Such an order is typically taken
out by the producer of a film or musical composition against
internet service providers, telecommunications service provid-
ers and individuals in general, to enable the operation of the in-
junction against all persons in the entire causal chain in piracy
operations. These injunctions are premised on the protection of
the copyright in the film or musical composition in relation to
which they are issued, and as they are against unknown defend-
ants, are ex-parte proceedings (proceedings without a hearing
of the defendant). They are issuable where there is a significant
threat of infringement of a right and the remedy against such
infringement is not timely or effective. The first ‘John Doe’ order
issued in India was by the Delhi High Court in Tej Television v.
Rajan Manda53 against unlicensed cable operators, restraining
them from marketing and broadcasting the Football World Cup
2002. Similar orders against unknown or anonymous defendants
have been issued in ESPN Software India Private Ltd. v Tudu En-
terprise, Ardath Tobacco Company Ltd. Vs. Mr. Munna Bhai and
Others, Reliance Big Entertainment Private Limited v. Jyoti Cable
Networks and Others and R.K Productions v. BSNL, Ashok Kumar
and others.
Import of Foreign Films

The Director General of Foreign Trade has notified a policy al-
lowing the import of foreign cinematographic films without a
licence as long as the importer complies with provisions of all
applicable Indian laws governing the distribution and exhibi-
tion of films, including a requirement to obtain a certificate for
public exhibition under the Cinematographic Act, 1952. No un-
authorised or pirated films are allowed to be imported. Foreign
reprints of Indian films too are not permitted without the prior
permission in writing from the Ministry of Information and
Broadcasting.
Content Regulation
Under The Cinematograph Act, 1952, a Board of Film Certifica-
tion, for the purpose of sanctioning films for public exhibition,
has been set up. An application has to be made to the Board for a
certificate by any person wanting to exhibit any film. The Board
grants a ‘U’ Certificate or a ‘UA’ Certificate, if the film is suit-
able for unrestricted public exhibition. In case a film is unsuitable
for unrestricted public exhibition, it gets an ‘A’ or ‘S’ certificate.
Any person who exhibits a film that has been restricted by the
Board is punishable with three years of imprisonment or a fine of
`100,000 or both in case of a continuing offence. This may extend
to `20,000 for each day during which the offence continues.
Also, if a film without a certificate or one with an ‘A’ certifica-
tion is exhibited to the general public, the police has the power to
seize it. Under the Cinematographic Act, producers who are ag-
grieved by the decision of the Board are allowed to appeal against
them. In 1986, the Film Certification Appellate Tribunal consist-
ing of a retired High Court judge and four other members was
formed. It is empowered to set aside decisions of the Board. In
addition, Section 6 of the Cinematographic Act mandates that
the central government may at any stage call for the record of any
proceeding in relation to any film which is pending before the
Board or has been decided by the Board/Tribunal and make such
order as it thinks fit.
An issue arose relating to the requirement for certification of
films for exhibition in film festivals. After the recommendation
of a committee of filmmakers and academicians in 2005, films
meant for screening at film festivals were given exemption from
2006, the logic being that festivals are non-commercial in nature
and viewership is confined to delegates. A request for exemp-
tion from the process of certification has to be made with certain
information (to be sent by the director of the festival) and the
request would be disposed of within 15 days from the date of
receipt of the complete proposal.
FILM 213
Issue relating to obscenity and indecency in films and the re-

sultant issues of certification and non-exhibition have been dealt
with by the Supreme Court in various cases.54
Financing and Taxation

Financing of films can be a complex process and taxation issues
can arise since it involves a number of components. Following
are a few:
Foreign Investment
Automatic approval is available for up to 100 per cent FDI in the
film industry (that is, film financing, production, distribution,
exhibition, marketing and associated activities relating to film
industry) subject to the following:
• Companies with an established track record in films, tel-

evision, music, finance and insurance are permitted.
• The company should have a minimum paid up capital of
US$ 10 million if it is the single largest shareholder and at
least US$ 5 million in other cases.
• The minimum level of foreign equity investment would
be US$ 2.5 million for the single largest equity sharehold-
er and US$ 1 million in other cases.
• Debt equity ratio of not more than 1:1, that is, domestic
borrowings shall not exceed equity.
Right to Use Copyright in Film

In the case of C.I.T. vs. N. Subramaniam—(2006) 200 C.T.R. 678
(Mad.), it was argued that the payment of royalties for assign-
ment of copyright should be allowable as a revenue expenditure.
The issue was finally decided by the Appellate Authority and
upheld by the Madras High Court which decided that since the
benefit of film songs is for a short duration and does not accrue
for very long, it should be regarded as revenue expenditure and
not capital expenditure.
Entertainment Tax
Entertainment tax on films and cinemas is levied by state govern-
ments. This has created tremendous disparity with rates ranging
from Zero to 60 per cent across different states. For example, it
is 45-55 per cent in Maharashtra depending on the value of the
ticket and 20 per cent in Delhi. Film tickets are tax-free in Pun-
jab, Haryana and Jammu & Kashmir among some other states.
In the interest of rationalisation, the central government recom-
mended a uniform ceiling of 60 per cent with each state free to
fix duty rates below or at this ceiling. It also called for treating the
entertainment industry at par with information technology sec-
tor in regard to concessional and local taxes. However, the enter-
tainment industry has always argued in favour of it being put on
the Concurrent List, so it can enjoy tax concessions under central
regulations and is not controlled by the state government. The
burden has become even greater due to the imposition of VAT
and service tax by the central government.
VAT on Film Distribution

Under current VAT Rules, film distribution amounts to assign-
ment of copyright and is therefore liable to VAT. This is against
the legal view that film production is not a contract for sale of
goods but is a production of work of art, which involves the skill
of an artist and therefore, should not attract VAT.
Fee to Actors not a Capital Expenditure

In the matter of Amitabh Bachchan Corporation Ltd. vs. Dy. C.I.T.
(2006) 9 SOT 208 (Mumbai), the question of whether fees paid to
actors for professional services constituted a business or capital
expenditure was considered. It was held by the Appellate Author-
ity that since the payment was in the nature of using a brand or
talent, which is transient, it did not constitute acquisition of a
capital asset and was, therefore, allowable as business expendi-
ture in the year of payment.
FILM 215
Service Tax
Service tax continues to be applicable on the various services
involved in the production of a film, such as the director’s ser-
vices, actors services is applicable. In this respect, pursuant to the
Budget of 2012, actor’s services are liable to a service tax of 12.36
per cent. Further, in the Budget speech of 2013, the Finance Min-
ister indicated that the demand for exemption from service tax
for cinema exhibitors (cinema halls and multiplexes) has been
accepted. It is to be seen if such exemption is incorporated in the
promulgated Finance Act, 2013.55
Other Laws and Regulations

Various laws and regulations apply to cinema particularly in re-
lation to exhibition in theatres. Each state has its own act and
rules which have been promulgated over a period of time. Some
examples are as follows:41
1. The Cine Workers Welfare Fund Act, 1981

2. The Cine Workers and Cinema Theatre Workers (Regu-
lation of Employment) Act, 1981
3. The Andhra Pradesh Cinemas (Regulation) Act, 1955
4. The Delhi Cinematograph (Exhibition of Films by Video
Cassette Recorder/Player) Rules, 1986
5. The Gujarat (Bombay) Cinemas (Regulation) Act, 1953
6. The Haryana Cinemas (Regulation) Act, 1952
7. The Karnataka Exhibition of Films on Television Screen
through Video Cassette Recorder (Regulation) Rules, 1984
8. The M.P. Cinemas (Regulation) Act, 1952
9. The Bombay (Maharashtra) Cinemas (Regulation) Rules,
1966
10. The Mizoram Exhibition of Films on Television Screen
through Video Cassette Players Act, 1990
11. The Orissa Cinemas (Regulation) Act, 1954
12. The Tamil Nadu Cinemas (Regulation) Act, 1955
13. The Uttar Pradesh Prohibition of Smoking (Cinema
Houses) Act, 1952
14. The West Bengal Cinematograph (Regulation of Special

Exhibitions) Order, 1987
The Valuation Norms

In 2000, several media companies raised money from the stock
market. These included film companies such as Pritish Nandy
Communications, Mukta Arts and Adlabs. In the same year,
Shringar Cinemas was one of the few companies to raise money
through private equity. It sold 26 per cent of its shares to GW
Capital for `158 million. When Shringar raised money through
the primary market in 2005, it got a valuation that was just over
four times what it got in 2000. This is how GW Capital, which
sold 14.9 per cent of the 26 per cent that it owned during the IPO,
made its money and more. However, such examples were few and
far in between. Film companies largely made for disappointing
investments since their business performance—and therefore
stock market value—has been lackadaisical.
As a consequence, till 2003, there were very few examples of
private equity placement in the film business. ICICI Venture
picked up a stake in PVR Cinemas in 2003. Other than that,
some of the biggest film deals, so far, happened only in 2004 and
2005. Most of these were in the area of multiplexes and digital
theatres. Reliance-Adlabs, where the former took a majority and
controlling stake in the latter, is one such instance. More recently
the consolidation within the multiplex segment has led to some
straight merger deals between PVR-Cinemax and Inox-Fame.
The Variables
The valuation of a film company, irrespective of the basic multiples
that will be used, would centre around the following variables:
Integrated
Since the film business in India is extremely fragmented, com-
panies which have a presence across the value chain (produc-
tion, distribution and retail)—or are building it—fetch a better
FILM 217
valuation. This is because their ability to capture a bulk of the val-

ue that a film generates, at each stage, is much better. For instance,
Disney UTV was earlier only into production; it subsequently en-
tered distribution because it felt that middlemen were not able to
milk and exploit the film as it could and also because with a fuller
pipeline, its ability to deal with retailers or exhibitors improved.
The Point in the Value Chain

If a company is not integrated, a lot depends on the part of the
value chain it operates in. So we could go by the point in the
chain the company operates in:
Production For a production company the value of its library,
its long-terms contracts with writers, directors or actors, its pipe-
line, its ability to scale up and market more films every year,
have a good mix of films and its ability to command better trade
terms, are all crucial elements in the valuation exercise. The logic
for valuing film content is the same as that for television soft-
ware. The potential for future revenues though different revenues
streams, theatres, DVDs, satellite rights, music, syndication and
dubbing are calculated based on a discounted cash flow to value a
film. For an existing or older film production company, the value
of its film library is a crucial asset when it comes to raising money
or valuing the company.
Distribution A distribution firm’s strength stems from its pipe-
line. The more films it has to offer the retailer (theatre owner), the
better is its ability to negotiate. The second factor that gets a good
valuation for a distribution-only company, the kind of territories
it is present in, the spread it has across India and or overseas, the
better the spread, the better is its ability to make money.
Retail This is currently the favourite part of the value chain for
most investors, simply because it is easy to understand, measure
and the returns are almost immediate. The best way to describe
what works for a multiplex or single screen company is, scale. The
more screens it has the better economies of scale and therefore its
ability to squeeze profits out of the infrastructure it has built. A film
theatre chain (multiplex, digital, single screen) is primarily valued
on the number of screens it has, walk-ins, capacity utilisation, the
ATP it can charge and the mix of revenues. The less dependent
it on the ‘film’ itself, the happier an investor. Typically, a theatre
chain gets 50–70 per cent of its revenue from ticket sales, 15–25
per cent from food and beverage sales and about 5–12 per cent
from advertising. (See Table 3.2)
Table 3.1 The Shape of the Indian Film Industry
Year 2008 2009 2010 2011 2012

Total films certified 1325 1288 1274 1255 1602
Hindi 248 235 215 205 221
Telugu 286 218 184 192 256
Others 791 835 875 858 1125
Admissions (tickets sold, 3.25 2.9 2.7 3 3
bn units)
Number of screens Units) 10120 10070 10020 10020 10020
Domestic box office (` bn) 80.2 68.5 62 68.8 85.1
Overseas box office (` bn) 9.8 6.8 6.6 6.9 7.6
Home video (` bn) 3.8 4.3 2.3 2 1.7
TV rights (` bn) 7.1 6.3 8.3 10.5 12.6
Ancillary revenues (` bn) 3.5 3.5 4.1 4.7 5.4
(music, digital media, et al)
Total revenues (` bn) 104.4 89.3 83.3 92.9 112.4
Sources: FICCI-KPMG Report 2013, Film Federation of India, Central Board

of Film Certification, Focus 2012–World Film Market Trends – European
Audiovisual Observatory and author estimates.
Notes: 1) The figure for box-office gross is an underestimate as money usually
leaks out of the distribution system. Also the average ticket price (ATP) has
been going up. Even at a very low average of `30 nationally, the box office
revenues from 3 billion tickets is `90 billion. 2) The number of screens is taken
as constant since enough data is not available.
Kohli-Khandekar.
FILM 219
Table 3.2 The Big Guys in Film Retail
Multiplexes Digital screens

Company PVR Inox Big UFO Real Image
Screens (controlled 383 279 248 3156 2980

or owned)
Revenue (FY 2013, 10.9 7.65 6 1.1 1.9
` billion)
% revenues from 9 5 8 33 21
advertising
Source: Annual reports, Analyst reports and companies.

Note: 1) Real Image has installed 2980 screens of which 2000 are installations
with ad rights. `1.9 billion is its revenue from digital cinema against a total
revenue of `2.06 billion. 2) Both Real Image and UFO are digital technology
vendors not theatre owners. They may or may not control a theatre or some
screens. However PVR, INOX and Big are film retail companies whose main
income comes from owning the screens. 3) Most multiplexes too are digitising.
4) UFO's financials are for FY12. 5) The Big Cinema numbers are for its screens
in India only.
Kohli-Khandekar.
Table 3.3 The Indian Film Industry; Spot the Differences
Marathi/
Language Hindi Punjabi/Bangla Tamil/Telugu
Average budget 200–250 6 to 20 100–150
(` million)
Distribution free free ceiling on ticket
rates/shows
Marketing high low budgets are
costs capped by
default
(Table 3.3 Contd.)

(Table 3.3 Contd.)

Marathi/
Language Hindi Punjabi/Bangla Tamil/Telugu
Box-office 80% in first longer longer
2–3 weekends theatrical runs theatrical runs
Satellite and 30–40 per cent almost no music 20–30 per cent
music rights contribution to rights very little
revenues earning on
satellite
Source: The Mumbai Film Studios Regional Gambit, Business Standard, April 5,
2012.
Caselet 3a The Diversifying Revenues of Indian Films
Film—3 Idiots (Hindi, 2009) Details ` mn

Total Budget 400
Revenues
Domestic box office 2020
Overseas revenues 1000
Television rights 300
Ancillary 180
Total revenues 3500
Source: Vinod Chopra Films.

Notes: 1) The total budget figure does not include actor fees and
print and publicity cost. 2) The domestic box office figure is net of
entertainment tax. 3) Ancillary revenues include digital, home video and
music. 4) The overseas revenues figure includes some ancillary revenues
in that market.
FILM 221
Caselet 3b In Film Placements – A brief history
The use of products in films has been around for long. From
the Rajdoot bike in Raj Kapoor’s Bobby in the 1970s, to the
Coca-Cola in Subhash Ghai’s Taal in the 1990s, filmmak-
ers have tried to raise working capital using situations in a
film that could suit a brand. The exercise, however, is getting
more organised now, thanks to film companies which look
at this as revenue stream to start with, instead of later. Mar-
keters interested in using films for placements keep in touch
with film company executives in charge of marketing and
ask them for a dekko at scripts that could suit their brands.
Sometimes, this works well for, say, a Lenovo in Madhur
Bhandarkar’s Corporate. At other times even though it works
well, the brand cannot leverage it.
An example is the 2006 release Lage Raho Munnabhai–
Worldspace placement. When the Worldspace marketing
team saw the script, it was evident that there was a great
product placement opportunity here. With a little tweaking
of the script, Worldspace was in. The film’s release was meant
to coincide with the launch of portable Worldspace receiv-
ers, but the government permission for portable satellite ra-
dio did not come through by then. The film was released,
became a big hit and Worldspace got some great mileage.
But while the brand in the film is shown as a portable brand
which has a talk show by a radio jockey, Worldspace did not
offer either of these things in its actual on-the-ground ser-
vice in India then.
Yet in-film placement is popular with marketers for two
reasons. One, an ad cannot be skipped. It is part of the script,
so however much you dislike the placement, you are likely to
sit through it. Hum Tum had a teeth-grittingly large number
of in-film placements—from Radio Mirchi and The Times of
India to Kodak. But the film nevertheless worked and that
benefited all the brands.
Two, while there are no estimates of this, even if the film
is a moderate success, the cumulative reach it delivers across
(Caselet Contd.)
(Caselet Contd.)
retail formats—theatrical, cable TV, DTH, home video,

overseas—is by far the best value for money deal you could
get, say media planners. For instance, Worldspace had esti-
mated that it would reach around 50 million viewers, across
theatrical, cable TV, home video and other modes of deliv-
ery cumulatively. Lage Raho Munnabhai crossed that mark
within the first year of release itself. The first airing of a hit
film, say Main Hoon Na, on television itself could bring in
a rating of 10. That is more than what the top serials fetch.
For filmmakers there are revenue possibilities, more so at
the production stage, bringing in precious working capital.
For instance, Main Hoon Na (2004) brought in `15 million in
in-film placement revenue from Café Coffee Day, Pizza Hut
and other brands. Mere Dad Ki Maruti (2013) was a script
that Maruti was obviously very happy to associate with. Ac-
cording to insiders it sponsored a large chunk of the budget.
Notes
1. UTV is now a part of Walt Disney India.
2. Unless specified, the words ‘industry’, ‘film industry’ or ‘film business’
refer to the Indian film industry.
3. Kapoor went on to make Mr. India and the award winning Bandit Queen
and Elizabeth among other films.
4. My apologies to the readers who speak other Indian languages. I am more
familiar with Hindi, Marathi, Punjabi and Gujarati as languages. So I can
comment on films from those languages from a creative standpoint. How-
ever, I am unable to judge cinema from the South, East or other parts
of the country, texturally. The business part of it is easy to analyse but
without knowing the language, the richness of the story or what it seeks to
convey is almost impossible to gauge.
5. Some of the lines and thoughts in this part are excerpted from my column
Kai Po Che and other Stories, Business Standard, 12 March 2013.
6. Again for the sake of consistency I am going with the FICCI-KPMG num-
bers this year. However I do believe that they understate film revenues
grossly. My own estimate of the film business is that it is closer to `160
billion.
7. From 2000 onward, The Federation of Indian Chambers of Commerce
and Industry (FICCI) has held an entertainment industry event every
FILM 223
summer. From 2001, it was branded as FRAMES and is popularly referred

to as FICCI-Frames. It is a 2–3 day entertainment industry event held in
Mumbai. In the last few years regional versions of Frames have been held
at Hyderabad, Chennai and Kolkata too.
8. Focus 2012, World Film Market Trends, European Audiovisual Observatory
9. These quotes are excerpted a piece I did along with a colleague T.E. Nar-
asimhan, The Mumbai Studios’s Regional Gambit, 5 April 2012, Business
Standard.
10. Siddarth Roy-Kapur and Ajay Bijli’s comments have been excerpted from
interviews I have done with them for Business Standard. Lunch with BS,
Ajay Bijli, 20 April 2013 and Q&A: Siddarth Roy Kapur, 4 June 2011.
11. The revenues that a film company makes is not strictly attributable to the
number of films it releases in that year. Some of the revenues are from the
releases of previous years and some from releases on other formats such as
home video. But if you did a trend analysis over a decade or so the average
would hold.
12. Note that Eros is more like a trader. It acquires any and all films it can and
releases them. UTV and Yashraj, largely, produce their own films. There-
fore there is a large variation in the numbers. Reliance on the other hand
did not get back on its numbers.
13. Large parts of The Glut in Production are excerpted from my column on
The Case for making fewer films, Business Standard, 24 May 2011.
14. iRock Media is a company invested in by Manmohan Shetty, the founder
of Adlabs which got acquired by Reliance in 2005. iRock develops film
scripts and projects and then sells them to the studios. Its first project was
Ragini MMS.
15. Much of the data and points in this paragraph comes from a piece I did
along with a colleague T.E. Narasimhan, The Mumbai Studios’s Regional
Gambit, 5 April 2012, Business Standard.
16. I would add a whole lot of ancillary revenues—home video, satellite rights
to foreign broadcasters, streaming rights and ad revenues from online
sites—to this figure and put it closer to `10 billion.
17. The number of prints has a direct correlation with marketing and distri-
bution expenses. At anywhere between `60,000 to `70,000 are expensive.
However over the years, digital prints, which cost less than one-tenth the
celluloid ones are becoming more popular as theatres digitise. Anywhere
between 70–90 per cent of the total prints that a film releases with in India
are now digital.
18. Motion Picture Association of America (MPAA) statistics.
19. The films mentioned against the names of these studios are just a few of
the ones from these studios. It is not a comprehensive list of the film these
studios have produced or distributed in India.
20. Excerpted in parts from my piece on Cinema Advertising—Rising from
the Ashes, Business Standard, 31 January 2012.
21. Have used PVR as an example because it is India’s largest multiplex chain
and therefore representative.
22. Vishwaroopam was the Tamil version and Vishwaroop the Hindi one.
23. Quoted from The New Rules of Content, 5 March 2013, Business Standard.
24. The background on the industry, names of films and dates has been
sourced from three books. Thoraval (2000), Rajadhyaksha and Willemen
(1994) and Vogel (2004). Each of them is outstanding in the range and
depth of information they offer. The Lumiere was a brand of camera.
25. The Bombay film world of the 1940s is very interestingly presented by
Saadat Hasan Manto (1998). The English book is a translation of the origi-
nal short pieces written by Manto in Urdu.
26. One part of the reason could also be that income tax rates were terribly
high. So, there was less declaration and undeclared black money found its
way into the industry.
27. A producer is the man who usually puts together the entire film, from
money to cast to directors. The idea may come from a writer or director,
but the producer literally gives birth to the film. A distributor is like a
wholesaler. He buys the film for a particular territory and then hawks it
to different retailers—cinema hall owners in this case. For the purposes of
distribution India is split up into 14 territories. There is usually a clutch of
distributors who dominate each territory.
28. Both Kapoor and Chopra are no longer alive.
29. NRS is the National Readership Survey. It was later merged with IRS, the
Indian Readership Survey. See Chapter 1—Print.
30. See earlier editions of this book for numbers before 2005. This is based on a
sample and refers to population aged 12 years and more (MRUC website).
31. Most of the figures for collection are as reported in the press at that time.
32. The film starring Tabu looked at a woman’s infidelity and its impact on her
and her family.
33. While the announcement granting industry status to the entertainment
sector, including films was made in 1998, it was notified under the IDBI
Act of 1964 only in 2000, according to Siddhartha Dasgupta who was for-
merly with FICCI.
34. CII is the Confederation of Indian Industry. FICCI is the Federation of
Indian Chambers of Commerce and Industry.
35. According to reports Rajnikanth returned the money to distributors.
36. If one takes very conservative numbers—an average ticket price of only
`10 for the 3.2 billion tickets sold in 2001, Indian films should have
grossed over `32 billion at the box office in that year. They actually did
only `25 billion. The fact is money leaks out of the system in large quanti-
ties and then resurfaces either as finance for films or in other industries.
37. Some of these have now merged or consolidated with other firms. See The
Shape of the Business, Now.
38. This is a floating sort of number that ranges from 10,000 to 12,000. Am
using the number around when digitisation of theatres started.
39. DLP is a registered trademark of Texas Instruments and stands for Digital
Light Processing. It is a technology used in projectors and video projec-
tors. It was developed in 1987 by Dr Larry Hornbeck of Texas Instru-
ments. DCI a body of seven major Hollywood studios.
40. According to the FICCI-KPMG 2013 report.
FILM 225
41. Ibosnetwork.com
42. Anywhere between 70–90 per cent of the total prints that a film releases
with in India are now digital.
43. A chunk of the information on different types of agreements between dis-
tributors, producers and exhibitors comes from Amrit Shah. Septuagenar-
ian Shah has been handling the finances of producers in the Indian film
industry for more than five decades now.
44. Many of the old-fashioned agreements hold true for single-screen theatres
not for multiplexes.
45. The amounts mentioned are for the purposes of illustration. They are not
actuals.
46. Multiplex Operators Seek Higher Revenue Share, Aminah Sheikh, Livem-
int and Wall Street Journal, 10 February 2013.
47. The best source for regulation history was Rajadhyaksha and Willemen
(1994).
48. From Rights and Piracy the onwards, the legal section has been put to-
gether by Anish Dayal, Advocate, Supreme Court of India and a specialist
in media and entertainment law.
49. For example, Fair dealing [Section 52(1)(b)], performance in an educa-
tional institution [Section 52(1)(i)], inclusion of an artistic work publicly
available [Section 52(1)(u)].
50. See Indian Performing Rights Society Ltd. vs. Eastern Indian Motion Pic-
tures Association AIR 1977 SC 1443.
51. See the regulation section in the music chapter for more details. See Su-
preme Court in State of Andhra Pradesh vs. Nagoti Venkataramana (1996)
6 SCC 409 recognising the loss due to piracy.
52. This update was provided by Abhinav Shrivastava, an associate with the
Law Offices of Nandan Kamath in Bangalore.
53. The defendant is actual Taj Television (the former owners of Ten Sports).
But a clerical error in the noting of the case has meant that it is now cited
as Tej Television.
54. This aspect has been dealt with in the section on regulation in Chapter
2—Television.
55. This update was provided by Abhinav Shrivastava, an associate with the
CHAPTER 4
Music
The music industry best symbolises the possibilities and perils of digital.
T he Indian music business, it would seem, is rocking. India was

one of the three markets worldwide with exceptional growth
in numbers, along with Brazil and Mexico in 2012.1 Much of this
happened on the back of digital, which, after battering the music
industry with piracy and peer sharing services is finally deliver-
ing results. In 2012, the Indian music industry grew to `10.6
billion, up from `7.4 billion in 2008.2 The important thing is that
almost 60 per cent of this came from selling music in new for-
mats or non-physical sales. These could be downloads, streaming
music or ringtones, caller tunes via mobile operators. These are
all clubbed under digital (see Table 4.1).
The global business too started showing signs of revival in 2012.
Globally, the music business clocked US$ 16.5 billion in revenues,
a figure that grew by 0.3 per cent over 2011. This is the first time
the industry has recorded a growth since 1999 says the IFPI. 3Of
this, one-third came from digital which is growing at 9 per cent.
What then does this tell you? That digital can really trouble
you, disrupt your business and make life miserable for you, but if
you can harness it, it can deliver. For the last 15 years, the music
industry has been battered by every technological change that
ever hit the media and entertainment industry. Since music is the
lowest bandwidth product, it has always been the first to be hit
by everything that comes along—compression technology, the
internet, streaming, peer-to-peer sharing and so on. It has been,
like I mentioned in the last edition, the Petri-dish of all that is
happening to the media and entertainment business. And finally
it seems that the experimentation is coming to an end. Or at least
that there is some light at the end of this tunnel.
Much of this has happened because smartphones and other

devices make it easier to subscribe to or download and listen
to music from services such as Spotify, iTunes, Deezer or Vevo.
Over 100 countries now have services that offer legal downloads
and streaming against only 23 in 2011. This means that a lot of
users, who would have otherwise chosen a pirated service, now
have a convenient, affordable option. It has also happened be-
cause music companies have finally learnt to go with the flow
instead of resisting every new thing that comes along.
The music industry has a history of protesting against every
new technology. One of the first complaints was against recorded
music. In the 1940s, live musicians went on a protest because they
were worried that vinyl records would ruin the live concert busi-
ness, then the largest source of revenues for the industry.4 As luck
would have it, the share of the live concert business went down
and that of recorded music rose. Now one of the hottest emerging
revenue streams for recording companies seems to be live music
as the numbers show. Life, it seems, has turned full circle.

The Shape
In many ways, the Indian music industry is fairly global. It reacts
and acts just as business does elsewhere. Yet, in many ways it is
uniquely Indian. There are three things that distinguish it:
One, the dominance of film music. More than 70 per cent of the
revenues of the music business—digital or non-digital—come from
film music. Once this fact is internalised, understanding the Indian
music industry is not so difficult. It makes it easier to comprehend
the industry’s structure which is completely different from anything
else in the world. Many international and Indian companies have
tried to break the hold films have over the Indian music market.
Some of them have been mildly successful. That is why the share of
films in the total music market fell from about 95 per cent in early
1990s, to between 60–70 per cent of the music market in 2007.
Two, the relatively high levels of piracy, about 25 per cent as
recorded at the last estimate.
MUSIC 229
Three, the extremely fragmented nature of the business. There

are hundreds of music companies and scores of associations that
represent them. For instance, the South Indian Music Companies
Association (SIMCA) or the Indian Music Industry Association
(IMI). Even then several large companies—T-Series or Yashraj
Films for instance—are not members of these organisations.
The Big Changes

The three major changes that have taken place in the industry in
the last 3–4 years are:
Royalties Go Down
In 2010, the Copyright Board ruled that private FM stations need
pay only 2 per cent of revenues as royalties. This came after years
of friction between private radio operators and music companies.
Here is what happened.5
Whether it is playing recorded music in public places, in ads,
on radio, on the net or on the mobile phone, music companies
have been at loggerheads with almost all categories of users. One
part of the mess stems from India’s complicated royalty admin-
istering regime. The other is that most aggregators and media
companies baulk at paying 20–30 per cent of their revenues for
music acquisitions.
Nowhere is this more evident than in radio. Radio companies
pay royalties to three organisations: PPL (Phonographic Perfor-
mance Limited); the Indian Performing Rights Society (IPRS) for
Hindi film music and SIMCA for South Indian music. In addition
to these, some companies such as Yashraj Films sell their music as
individual right-holders and not through industry bodies.
In India, royalty is a flat rate charged per hour per station. So,
if Red FM plays a song in Delhi, (a large advertising market) or
Big plays it in Hissar (a smaller market), the absolute amount of
royalty remains the same. As a percentage, this could range from
7 per cent of revenue for big city stations to 40 per cent for small
town stations. This put cost pressure, especially on the smaller
stations.
Then there is performing rights—a nightmare to implement.

How many weddings, parties, pubs or restaurants can the industry
educate and monitor in a country like India? Telecom operators on
another hand are notorious for under-sharing revenues with con-
tent companies. It is evident that the ability of music companies to
make the most of the content they create is severely limited.
Music companies also have a somewhat intractable attitude to
this whole issue. This stems largely from their global parents. Even
in mature markets such as Europe, successful online media brands
have trouble persuading music companies to do deals with them.
Much of this therefore led to the wrangling which finally went
to the Copyright Board.
Copyright Act Goes Through a Transformation

Much of this wrangling was happening along with one other
change. Led by artistes like Javed Akhtar, there was through 2010
and 2011, a huge lobbying effort to change the Copyright Act.
The idea was to ensure that all the new revenue streams emerging
from digital delivered for everyone—the lyricist, the musicians,
the composers et al.—and not just the music company. As a result
of this lobbying, the Copyright Act (Amendment) Bill was passed
in May 2012. (See Caselet 4a). It basically makes the songwriters,
composers and others the owners of the music they create and
does not allow them to assign the rights to film producers or music
companies. It makes it mandatory for radio and television compa-
nies to pay a royalty to the owners of a copyrighted piece of music,
every time it was broadcast. The idea is to make the publisher of
the music the central figure in the game. So far, music companies
had appropriated the whole rights and royalty game.
Digital Music Takes Off, Legally

One of the biggest changes is the way digital music, in legal form,
has taken off. Going by the FICCI-KPMG 2013 and the IFPI
numbers, it is evident that there is a huge change sweeping across
the music market. There are several ways in which digital music
is being sold and consumed in India. These are:
MUSIC 231
• Caller tunes, ring back tones, ringtones and their ilk sold
through mobile phones or through internet portals directly.
• Music streaming services such as gaana.com, saavn.com.
These offer streaming services for packages ranging from
$1.99–$7.99 a month as subscription fees.6
• Downloads through sites such as iTunes, Flyte or
Hungama.com. These sell single songs at prices ranging
from `7–`15. They also offer streaming music services
for anywhere between `100 and `200 a month.
• Music bundled with hardware such as smartphones or tab-
let computers. This was discussed as an opportunity in the
last edition and it seems to have finally materialised.
There couldn’t be better news. Legally sold digital music be-

comes a deterrent for piracy, the scourge of the industry so far.
The estimates for piracy range from 25–50 per cent of the market.
My guess is that pirated music perhaps sells as much as the legal
version. As digital penetration increases, the avenues through
which music can be heard and bought increase. At over 867
million mobile users in April 2013, India is one of the largest and
fastest growing mobile markets in the world. Many mobile phone
users pay anywhere between `5 and `30 to have tunes of, say, 3
Idiots, as ringtones on their mobiles. As mobile penetration and
usage rise, music and mobile companies both stand to gain. As a
result of this move towards digitisation, all kinds of aggregators,
such as Hungama.com or Indiatimes.com have grown. These
help open up the overseas markets too.
Hungama.com, for instance, holds the worldwide digital rights
to 2.5 million pieces of digital content in different languages. This
includes, largely, music and videos from Indian films, games and
other things. It serves content across 47 countries through tie-
ups with mobile operators and Internet Service Providers (ISPs)
in these countries.7
This is good news for both the film and music industries. The
overseas market was a promising revenue stream coming up in the
mid-1990s. At one point, it brought in as much as 30 per cent of
a music album’s revenues. Piracy and the lack of distribution and
marketing money, however, limited Indian music companies from
exploring the overseas market. Digital music, whether on the
Internet, mobile or satellite radio, can help unlock this potential.

Most stem from the nature of the media market in India.
Outsourcing
Just as in television or film, opportunities for doing outsourced
work, especially in a low-bandwidth product like music, exist.
It is just that they never attracted attention till recently. In 2008,
Contech BPO Services, an Ahmedabad-based business process
outsourcing company, got into back-office operations in music. It
does a host of things like music typesetting, music transcription,
music conversion from different formats, among scores of other
services. Music in fact is one of the specialised services it offers.
While it doesn’t give any names some of the largest American
music companies are clients.
Live Music or Concert Revenues

The decline in physical sales and the rise in digital and free music
has led to an increase in the demand for live music. This, inci-
dentally, is true globally. It is the rise of digital music and file-
sharing technologies that has boosted this trend. This is because
the sampling and word-of-mouth happens pretty fast on these
media. And they give rise to the need to see a good singer or
performer live. There are entire markets, such as Brazil, where
music is given away free to start with and once sampling creates
a fan-following, the singer and musicians make money on live
performances.
The proof that live concerts will become bigger also comes
from recording companies which are now asking for 360-degree
deals from artistes. That means the labels get a share in the artist’s
touring revenues, merchandise and other revenues that would
have usually gone directly to the singer. In a bid to stem the slide
in physical sales, most companies such as Sony had started redo-
ing contracts to be involved in everything to do with an artiste’s
career—touring, performances, merchandising and so on.
In India so far, concerts have not brought in that kind of mon-
ey. This is not because there is no demand for them. The issue is
MUSIC 233
that constraints from the event management side—no concert

venues, high taxes—all act as dampeners to the business (see
Chapter 9—Events). Besides, the notion of ‘free passes’ is very
strong in India. According to one event management firm, just
about 20–30 per cent of the revenues of a concert come from
ticket sales. The bulk of the money comes from advertisers. The
FICCI-KPMG 2013 report and several other sources talk about
the growing popularity of concerts in India. The report pegs the
amount that the music industry made from concerts at `0.9 billion.
(See Table 4.1).
Bundling Music with Hardware and Other Services

This option is routinely used by personal computer (PC) and mo-
bile phone companies. Now almost every device that we use—
smartphone, tablets, PCs, mobiles—comes bundled with some
music or access to a music streaming service. Similarly, ISPs
could bundle a music streaming/download service with your
month broadband package. Globally, some of the most success-
ful subscription services, such as Spotify, have taken off on the
back of bundling.
Radio, Television and Other Formats

As private FM radio stations and TV channels keep rising, they
are becoming critical revenue streams. Though the Copyright
Board actually reduced royalties to be paid to music companies
by radio operators to 2 per cent of revenues, the next round of
growth will make up for it. Currently there are 242 radio stations.
When phase three of radio licensing happens, over 800 more FM
stations will come into the fray. This means a bigger demand for
music, which forms 90 per cent of what they air. Then add TV.
India already has over 800 TV channels. Many use music on their
shows or as part of the backdrop in some programme or another.
These two revenue streams have been growing fast to hit `1.6
billion in 2012, going by the FICCI-KPMG 2013 report. After
the changes in the Copyright Act in 20128, one of the big changes
happening is the overhauling of the royalty collection bodies. So
far these have done a shoddy job of collecting money on behalf

of artistes and music companies. With any luck, they will become
more efficient and get more from TV, restaurants or other places
where music is played.
The Past
The Backdrop
Till Thomas Edison invented the phonograph in 1877, the music
business was largely about live concerts. By 1890, a German im-
migrant in the US, Emile Berliner, perfected the phonograph for
home use. This was later modified to the gramophone which was
introduced by The Victor Talking Machine Company.
Competing technologies like radio put huge pressure on the
music business in the early part of the 20th century. There was
confusion about who would pay royalties to whom and for how
long. Radio station owners insisted that once they had bought a
recording it was theirs to use without any further financial obli-
gation. There was the usual outcry against these new technolo-
gies. The record business was in limbo for a long time after World
War II, because of a protracted musicians’ strike. They sought
compensation from record companies for income lost because
more people were listening to recorded performances, which
meant that the demand for live performances declined.
Back home in India, during the 1890s in Bombay (now
Mumbai) and Calcutta (now Kolkata), many traders had taken on
the phonograph as an additional item of trade, along with their
other merchandise. By early 1900s, they were offering ‘private
cylinder’ recordings of eminent singers to induce potential
buyers9Later, one of these traders, Valabhdas Runchoddas of
Bombay, became the first official wholesaler for Edison, Columbia
and Pathe Products. In 1901, the first music company in India,
The Gramophone and Typewriter Company of India Limited,
also called Gramco (now Saregama) arrived.10Set up as a trading
company, it was the first overseas branch of the Gramophone
and Typewriter Company established in London in 1898. Soon
after setting up the branch office, some officials came down from
London and took about 550 recordings in Calcutta in the latter
MUSIC 235
half of 1902. These were then pressed into discs in Hanover,

Germany, and sold in India.
During the early part of the 1900s, Gramco had competition
from several European and Indian companies. There was Singer
Records, The James Opera Record from The James Manufactur-
ing Company, Beka records, Rama-Graph Disc Record, H. Bose’s
Records and Royal Record and Binapani Disc Record, among
others. The competition forced Gramco to start manufacturing
out of Calcutta in 1907. That gave it a competitive edge as it could
press discs faster than rivals who had to send them to Europe. It
remained the only gramophone records manufacturing company
in India till 1970. In its early years, it made both gramophone re-
cords and the gramophones themselves (incidentally it also used
to sell electric irons, refrigerators, etc., imported from the parent
company in the UK).
By 1912, many of its competitors shut down while Gramco
continued to record hundreds of titles in various parts of India.
In 1925, it introduced the HMV label in India. In 1928, competi-
tion came from the Columbia Gramophone Company. However,
Gramco lived long past all real and potential rivals to become
bigger and stronger in India. One reason was the international
merger of Columbia, Gramophone, Odeon and Pathe; all rival
brands into one company—Electric and Musical Industries Lim-
ited or EMI, in 1931.11
The Gramco (HMV) Years

From the 1930s onward, the ‘talkies’ or films with sound came
into India and film music started dominating what was earlier a
classical and light music market. That has remained the shape of
the market to date. Various labels from the south and north tried
to break Gramco’s monopoly over the market by luring singers
onto their side, but most folded up soon. The setting up of a re-
cording plant and selling them was a capital-intensive business
and Gramco had a head start. Not too many companies could
therefore survive against it.
By the 1960s, Gramco had grown into a monopoly. Most other
rivals were insignificant. That is because almost all of them—
Hindustan and Megaphone in east India; Ace, Sangeetha, Hathi
and AVM in south India; and Brijwani and Marwari in north

India—used to be manufactured by Gramco. The first time
Gramco faced a serious threat to its monopoly over film music was
when Polydor came into the market in the late 1960s. Producers
and music composers finally had an alternative and were glad for
it. It was a new experience for Gramco to not have every piece of
film music created, come to it. Old-timers remember that Gramco
would boycott composers or producers who sold the rights of
their film’s music to Polydor (later called Music India). According
to one estimate 50 per cent of all the music ever recorded in India
is with Gramco under its HMV label.
Shashi Gopal, who used to work with Gramco in the 1970s
and later set up Magnasound12 remembers: ‘[T]hat was a differ-
ent time. There was no information on the international market,
new technologies, there was only one television channel and one
radio station. We were a total monopoly. Even artistes who later
became very famous had to wait outside the office of the general
manager A&R (Artistes and Repertoire) for two months or more
before they were given a hearing’. The A&R department in a music
company searches for new talent which can be recorded and sold
by the company. Think of it as the department that goes through all
the creative raw material and tries to find the good pieces.
The early part of the 20th century was also the richest in terms
of music. Some of India’s most talented music directors, lyricists,
singers—Lata Mangeshkar, Mohammad Rafi, Naushad, S.D.
Burman, K.L. Saigal, Suraiya, Sahir Ludhianvi, Hemant Kumar—
among hundred of others, recorded their best work on a Gramco
record or cassette. It was a highly profitable business. Gramco,
the market leader, made net margins of 20 per cent on the re-
cords business, though the consumer electronics business usu-
ally pulled the actual figure down to 5–10 per cent throughout
the 1970s. It was during this time that Polydor with a national
repertoire, CBS in Western music and Inreco with Eastern Indian
music too became known names.
The Indian Market Shifts

In the 1970s, cassettes were taking off internationally. The way
they changed the market is a story by itself.
MUSIC 237
Gramco Slips
The market leader dismissed cassettes as ‘just a technology’, say
insiders. Instead it poured money into a new record factory in
Calcutta. It set up a music cassette plant in the late 1970s with a
licenced capacity of 1.2 million units per year. The licence came with
a 75 per cent export obligation. That meant that of the 1.2 million
cassettes Gramco made, it had to export 0.9 million cassettes—
only 0.3 million could be sold in India. At that time, this condition
did not make much of a difference to Gramco. The thinking within
the company was that its main business was records. It did not do
anything to popularise cassettes, since it wanted to avoid eating into
the share of records. The prices of cassettes were kept deliberately
high so as to discourage consumers.
It seems silly in retrospect; but remember that Gramco was
the only major company selling music in India for over 70 years.
It had never seen real competition and had no need to fear it.
Besides, its manufacturing was in high-cost, union-led Calcutta.
The incentive to keep those plants going even when the record
factory in Bombay was shut down in 1981 was very high. It had
a consumer electronics division that was a millstone around its
neck. As a large sector player, it had to pay 25–35 per cent duties
as compared to the 10–15 per cent for small-scale companies.
Then, there were high overheads plus labour costs. Much of this
made the record player unit unviable. In 1968, when it had to make
a choice between shutting it down and investing more to make it
viable, Gramco chose the latter. By the late 1970s, Gramco had lost
the market to better players from Philips, Sonodyne and Cosmic.
The company was very taken-up with what it had and, there-
fore, what it could sell. Somewhere along the way, Gramco lost
sight of a crucial fact. While record manufacturing involved bil-
lions worth of investment, making cassettes was a cottage indus-
try. If a company did not pay royalty or taxes, a cassette could
be produced for as little as `8 per unit according to one esti-
mate. As against this, each gramophone record cost `20 to make.
Tape manufacturing involved putting together easily procurable
things like cassette covers, liners, shields and screws and getting
the tapes copied by the multiple cassette duplicating systems
from a master or original tape. The cheapest duplicating system
was available for `50,000; the most expensive was `5 million. The
whole operation could be put together by almost anyone with

some money and a small place.
However, from Gramco’s perspective, since records made for
a capital-intensive business and piracy was unknown, it did not
expect any competition. Till 1980, the total music market worth
`200 million comprised only records and organised players. By
1982 though, Gramco’s world had turned upside down.
Gulshan Kumar and Cassettes

In the early 1980s, Gulshan Kumar, a former fruit-juice seller,
discovered a loophole in the Indian Copyright Act of 1957. As
long as he used new singers, he could use the same tunes that
Gramco owned. Kumar started a cassette manufacturing opera-
tion with completely unknown singers rendering popular Lata
Mangeshkar, Mohammad Rafi or Kishore Kumar songs. These
were called ‘version recordings’. To get around licencing and
taxation problems, he had a series of companies, each a small-
scale operation, so that there were no capacity restraints. Unlike
Gramco, which depended on just dealers, Kumar distributed
through every possible retail outlet—paan shops, on the streets
and through kirana (grocery) shops—at anywhere between `10
to `15 per cassette. It was alleged that it was by evading sales,
octroi and excise duties that Kumar’s company, Super Cassettes
Industries (that sold under the T-Series label), could price its
cassettes so low.
This changed in a very fundamental way the power equations
in the music industry and made music accessible to a large chunk
of Indians. In 1983, the cost of a cassette was `25 against `40 for a
record. A cassette player cost `600 while a record player, `1,000.
Combine the low cost of entry with the low cost of usage and it
was evident that the market would grow. Initially, Gramco con-
tinued to use only 25–50 per cent of its cassette-making capacity.
The red ink resulting from the loss on record sales, and the bleed-
ing consumer electronics division, pushed the company further
down. From `204 million in 1981–82, revenue dropped to `137
million in 1983–84.
It then pushed up production to about a million cassettes by
sourcing them from outside. That backfired. First, because the
MUSIC 239
contract manufacturers got hold of the master copy and started

producing illegal copies. Second, quality was a problem. The dice
was further loaded against any organised sector manufacturing
of cassettes because the budget of 1982 imposed an excise duty of
26.75 per cent on pre-recorded music cassettes. Also, there was
a 13 per cent royalty to be paid to artistes and 15 per cent sales
tax that the pirates never paid. All of this served to widen the gap
between the pirate’s prices and that of Gramco.
Just like T-series, a host of other players started getting into
the act. There came up not one but several alternatives to both
T-series and Gramco, like Venus and Tips. Many others started
off just like T-series by first copying original Gramco tunes and
then starting their own legitimate business of buying rights and
selling the music. As a result, the market took off and penetration
increased. From `200 million in 1985, Gulshan Kumar’s T-Series
brand hit `1.3 billion in revenues by 1989.
While the way some of these companies started could be
questioned, their contribution to the business cannot be ig-
nored. When the leader overlooked a new, cheaper technology
that could give consumers a better option, others grabbed the
opportunity.
Kumar’s entry is important not only because it expanded the
market, but also because what he did symbolises the larger truth
about music—or for that matter any media product. New tech-
nologies always offer the promise of faster, easier access. It is up
to existing companies to make something of these opportunities.
In the 1980s it was the cassette, in the 1990s the CD and now it is
the Internet and mobile telephony.
Gramco Reacts
Back in the 1980s, Gramco reacted in many ways. It shunned
film music completely, lobbied for a clampdown on piracy. The
Indian Copyright Act was amended to make piracy a cognis-
able offence and an excise duty was slapped on blank cassettes,
the main raw material for the pirates. It also got the industry
to rally around and form the Indian Phonographic Industries
Association (IPIA) in order to fight piracy. Gramco, CBS, Poly-
gram, Master Records and InReco were the founding members.
IPI later became IMI—Indian Music Industries Association, the

current industry body.13 Finally, it also got the excise duty on
pre-recorded cassettes abolished in 1984. As a result, the price
of a cassette dropped to a minimum of `18 and a maximum of
`34, in the organised sector.
By the time Gramco managed to do all this, it had become a
sick company thanks to its non-performing consumer electron-
ics division and the almost defunct record business. In 1984–85,
it shut the year with a loss of `59 million on a turnover of `141
million: this, at a time when the market was booming. It needed
money to expand its cassette-making capacity, to pay off its debts
and to run its operations. Finally, EMI found a saviour in RPG
Enterprises, which took over the Gramophone Company of India
(GCI). The RPG Group has interests in other businesses such as
tyres, carbon black, tea and chemicals.
The Good Years

In September 1985, Pradeep Chanda took over as CEO of
Gramco.14 He started out with a voluntary retirement scheme
(VRS) to cut costs. But it was the changes he made in the music
business that reaped returns for the company.
The first was a fundamental change in its marketing—a func-
tion that never got much attention earlier. Till it could earn
enough money to buy film music, Gramco decided to use its
rich repertoire to generate revenues. Its HMV had been the
only major label for over seven decades. Every piece of Hindi
music ever recorded in India, from K.L. Saigal to Kishore Ku-
mar, was (and is) in its library. All it had to do was repackage
it in as many forms as possible. The Collector’s Series of Indian
Greats was retailed to institutions like Citibank, which used
them for promotions. The Golden Collection was promoted for
more than seven months and is still paying off. It was a good
idea in media business terms. Any sale from the repertoire adds
straight to the bottomline, since the cost of creating the music
(or any other content) is zero.
Second, and crucially, it went back to film music albeit in a
different way. Gramco started offering an advance (royalty) to
producers against the music rights. Till then, the whole system
MUSIC 241
operated only on payment of royalties after the music was re-

leased and sales tabulated for each year. By paying an advance
Gramco took the risk on betting that the music was good, but it
also meant getting the music cheaper than it would be if it proved
to be successful. This practice became very popular. It became a
means of getting working capital for perpetually cash-strapped
film producers.
Gramco would then promote the music of these films heav-
ily, something it had never done earlier. Sunil Lulla, who was
with Gramco in the early 1990s remembers, ‘with (the film)
Darr we did everything you could do with a soap. There were
even Darr matchboxes.’15 The company had a good run with
hits like Chandni, Ram Lakhan and Saudagar, but the film that
turned it around, according to Chanda, was Maine Pyar Kiya.
A totally unknown film from a down-in-the-dumps produc-
tion house, Rajshri, became a runaway hit and sold over eight
million cassettes.
By the early 1990s, many music companies like Tips and Venus
also started financing films completely, instead of just offering
advances. The music industry was beginning to look very robust
compared to the film industry which was plagued by piracy and
falling attendance. At one point, there was talk of the music in-
dustry overtaking the film business in size. That, of course, never
happened but the link between the success of a film’s music and
the film became stronger. If people liked the music of Taal, for
instance, it inevitably meant higher box office collections for the
film and vice versa.
Third, just like Super Cassettes, Gramco began investing in
new, non-film artistes. Among others, it ‘discovered’ Alisha
Chinai and Malkiat Singh. Super Cassettes had used this route
of betting on absolutely unknown music composers, lyricists
and singers quite successfully. Young unknown singers and
musicians are happy to work for small sums of money. The only
cost that a recording company incurs is of mass manufacturing
the tapes and distributing it. If the singer is a hit, the returns
are disproportionately high compared to the investment. In the
process, Super Cassettes discovered some popular singers like
Sonu Nigam. In a way this is something that all music companies’
A&R division is supposed to do; though, in reality, most prefer to
bet on safe and established voices.
Finally, Gramco also expanded its dealer network from 2,500 in

1985 to 35,000 retailers whom wholesalers sold to by 1991. While
earlier it threatened withdrawal of dealership rights, this was a dif-
ferent market and Gramco had learnt the rules. All of this worked.
By 1989–90, the company was in the black again with a small profit
of `1.6 million on revenues of `284 million.
Meanwhile, Kumar too had been very active. He had forayed
into a variety of businesses—tape decks, film magazines, CD
players, video cassettes, television sets, and even washing pow-
der! His most important diversification, however, was into films.
As Kumar said, in a Businessworld story chronicling his success,
‘A hit film means increased turnover and profit for many of my
divisions.’
For the second time, Kumar had recognised an essential truth
about the music business (of that time) that his old, respectable
rival had missed. Since films brought in 90 per cent or more of a
music company’s revenue and since (by now) music companies
paid huge advances to acquire film music, it made business sense
to integrate forward into making the film itself. That way a mu-
sic company could have a greater sense of the risks involved and
would be better placed to reap the benefits of a hit. Venus, Tips
and a whole lot of other music companies followed in Kumar’s
footsteps. Earlier in the decade, CBS had tried the strategy with the
moderately successful Sadma, Agar Tum Na Hote, and a few other
films. The first few films from Kumar’s were—Aashiqui (a hit) and
Lal Dupatta Malmal Ka (a moderately successful video film).
The Satellite TV Years

By the early 1990s, music was operating like an industry, thinks
Chanda. Around this time three important events gave another
cassette-like fillip to the market.
The Rise of Music Channels

The first was the birth of music channels—like MTV and Channel
V, Zee Music, ATN and, later, ETC—and of music videos. These
channels gave music an audio-visual feel which was like watching
the song on film, in a theatre or watching Chhayageet, a TV show
MUSIC 243
based on film songs.16 Till that time, no singer had ever had a
music video. Nor was there a Billboard-type of listing or ranking
of popular music. Soon, music videos became very popular with
audiences and with music companies. They exposed listeners to
different types of voices and music and gave the industry several
24-hour platforms to promote their products.
Making a video alone could cost anywhere between `0.5 to
`1 million; then, there was the airtime bought on a music chan-
nel. Therefore costs doubled. The good part was that new artistes
started getting breaks since television made it easier to promote
them. If Gulshan Kumar had taught the industry a lesson in dis-
tribution and pricing, music channels took it a step further and
taught them the importance of promotion and brand tie-ins. As
a result of music channels airing music videos, non-film music,
especially segments like Indipop, ghazals and devotional music,
grew significantly from about 10 per cent of the market to about
30 per cent.
The Coming of the Big Boys

The entry of big multinational and Indian companies into mu-
sic software and retailing changed the size, scope and expec-
tations of returns from this business. Sony Corp set up Sony
Music in India in the late 1990s.17 At one point in 1999, the total
investment coming into the industry was pegged at `1.5 bil-
lion. A chunk of this was in the area of retailing. BCCL started
investing in Planet M, its chain of music retail stores across
India.18 The south-based LMW Group set up 12 stores across
the region; and there were also stand-alone stores that came
up—like The Groove in Mumbai, and RPG Enterprise’s own
chain, Music World.
This was the most crucial investment in the business so far. Af-
ter Kumar’s attempt at expanding distribution through paan and
kirana shops, nothing had really happened on that front. Except
for Rhythm House, Mumbai did not have a single large music
retail store till Planet M or The Groove came up. Music compa-
nies needed larger retail stores to display their latest releases and
catalogue albums (a collection of archival music). Typically cata-
logues generate 50–60 per cent of the sales for large companies.
Without the depth and space that a large store can offer, it was
impossible to tap into this market.
The Coming of the CD

The CD did not take the Indian market to a digital world
immediately as it did in other countries. India remained a
cassette-driven market. Both the price of the CD (about `300
to `600 as against `25 to `100 for a cassette) and CD players
were a deterrent to its growth initially. In 2001, only six million
of India’s 50 million or so middle-class households owned a CD
player, since it is a high-cost hardware. Also, for some reason
CDs were associated with international music. Just 2 per cent
of film music volumes came from CDs whereas 10 per cent of
international music volumes come from CDs, the highest in any
genre. However, in 2002, most music companies dropped CD
prices to `99. It led to a doubling of CD volumes to about 15 per
cent of the total music volumes sold in 2005.
The Bad Times

The music industry went through a particularly bad time from
2001–04. This was due to piracy, mediocre music and the rising
cost of buying rights. Tips paid `85 million for Yaadein only to
make a loss of `55 million on it. Of the 13 albums Tips released in
2001, it reportedly made a loss on nine. Gramco lost `160 million
in Fiscal Year 2002, thanks to film music.
Piracy struck again. At some point in the mid-1990s, when it
hovered between 25–40 per cent of the market, it looked like pira-
cy had been controlled. That was because of the raids and seizures
made by ex-super-cop Julio Rebiero and his band of former police
officers across the country. Incidentally, piracy is endemic to most
of Asia. Pakistan does not have a music industry because piracy
eats away more than 90 per cent of the market. In 2003, after two
years of stagnation and one of de-growth, IMI increasingly became
active on both raids and public awareness campaigns. But the level
of piracy had already jumped to 50 per cent according to IMI.
Piracy combined with high fragmentation explained (and still
does) why a lot of international companies did not see any merit
MUSIC 245
in investing in India. Universal did so, somewhere in late 1990s,

as did Sony. The others had a peripheral presence in India. If in-
ternational companies had not achieved much, none of the top
10 companies in India like Super Cassettes or Saregama have any
size to boast of, considering that they have been around for dec-
ades. While the revenues of Super Cassettes, the largest company,
are over `4 billion,19 those of Saregama, the oldest company were
at 1.5 billion in March 2012.
The Rise of New Revenue Streams

This is when hope and growth came from several new avenues of
distribution.
Internet and Mobile

The IMI was probably one of the first bodies in the world to give
out experimental licences to Internet radio stations and portals
that offered streaming music or downloads in 2000. Several
companies like Hungama.com bought these licences. (More on
this in ‘The Shape of the Business, Now’.)
Radio and TV
As private FM stations went live all across India, they created an-
other revenue stream for music companies. In 2012 there were
242 stations with over 839 more expected from the next phase of
licensing. So the revenue possibilities for music companies keep
rising. Of total industry revenue, about 13 per cent came from
royalties from radio and TV companies. (See Table 4.1.)
Satellite Radio, Streaming Services, Internet Radio et al.

Stations such as SiriusXM are big buyers of music rights for their
subscription-based services. While this may or may not become
a big revenue source, it is a great way to market a repertoire that
cannot sell big numbers in the physical format. Then there are
channels such as YouTube or services such as iTunes or iMusti
which offer legal downloads or streaming services. These have
become critical sources of revenues for the music industry. (See

The Shape of the Business, Now.)
Home Video
A music company is usually among the first ports of call for most
film companies launching a new project. That is because the sale
of music rights brings in working capital. Many music compa-
nies started leveraging this to pick up home video rights too. The
distribution channels remain largely the same as music—Planet
M or MusicWorld or any of the mainline music stores also stock
DVDs and VCDs. However, with the physical format under
threat, this market has been shrinking.

While the value chain in the music industry is fairly uncompli-
cated, the economics varies according to the music on sale. The
three broad categories in which business is done in the music
industry are:
Film Music
When Aamir Khan Productions made Lagaan, it sold the rights
to the film’s music and songs to Sony Music (then Sony-BMG)
for a reported `60 million. For Aamir Khan Productions, the
money was a part of the working capital for the film. Sony Music
then packaged the music in tapes and CDs and pushed it through
music and other retail outlets. This is an outright sale. Sony Music
retains the rights to the music of the film completely and bears
the cost of promoting it and the risk of its failure, and the rewards
of its success as well.20 After paying the cost of promotion, Sony
Music needed to sell 3.5 million tapes of Lagaan to break even: it
sold 3.2 million to start with. In all probability it more than made
up on its shortfall over the next few years.
So, the costs are those of acquisition, promotion, marketing
and distribution. The operating margins could be as high as
30–50 per cent. After the album has achieved breakeven, all the
MUSIC 247
money is added directly to the profits. It is a high-cost high-risk

strategy, especially since the cost of acquiring films had peaked
to unrealistic levels at one point. This is completely different from
the way it works anywhere in the world. However, in the non-film
market, the Indian music business operates as anywhere else.
Non-film Music
There are some music companies that do not buy film music since
the cost of acquisition is high. They try to discover new talent. The
cost of producing an album differs according to the artiste. To record
and market a small-time unknown artiste costs between `1 to `5
million. If he becomes successful, like Adnan Sami some years back,
the company can promote him aggressively to get higher sales.
The Portfolio Approach

Saregama nurtures new talent and acquires film music. Not all
the films that it acquires might produce successful music. It could
buy high-cost rights to two big-banner, expensive films, three
medium budget ones, a couple of small films and maybe intro-
duce a couple of new singers. The idea is that at least one of them
will deliver a blockbuster. The logic is the same as that of a mutual
fund—invest in some high-risk, high return, and some low-risk
low-cost stocks, so that both average each other out.
Catalogue
There are some years when nothing works. In 2001, none of the
big albums broke-even or made money. Except for Adnan Sami,
nobody saw a single hit that year. How do music companies man-
age in years like that? They depend on the steady sales from their
libraries. Saregama has the best catalogue in the Indian music
industry with about 25,000 hours21 of music a chunk of this from
films. From April–September 2004, in a particularly bad phase
for music, it got 40 per cent of its revenue from its catalogue,
essentially of old Hindi film songs. This money goes directly to
profits since there are hardly any costs involved in putting these
on shop shelves, except promotion and trade margins. Interna-

tionally, most music companies get about 60 per cent of their rev-
enues from catalogue sales.
The Metrics
There are no major metrics that are used in the industry. Most
would revolve around the quality of music. The others are ge-
neric, like copies sold or downloads.
The Regulations22
The Backdrop
Till liberalisation in 1991, there was no specific regulation impact-
ing the music industry. Just as in other sectors, it could not get
foreign labels or money into India easily. The IMI represents the
recording industry of India and is affiliated to the International
Federation of the Phonographic Industry (IFPI). This is a world
industry body with some 1,400 members in 66 countries and af-
filiated industry associations in 55 countries. Of these IMI is the
Indian chapter. The IMI has over 80 Indian music companies as
members23 and strives to protect the rights of phonogram produc-
ers and in the process promote the development of musical cul-
ture. It also acts as the face of the industry for lobbying and other
purposes.
Piracy has always been a big issue. However, with the advent
of digital music in compressed formats such as MP3, protecting
original recordings and legitimate distribution has become the
burning issue for the music industry. There are various issues
around which regulation in the music industry revolves. The big-
gest has to do with copyrights and piracy.
Rights and Piracy

Within this there are various permutations and combinations of
issues such as the following:
MUSIC 249
Rights The basis of the right in a musical work has three elements
to it, that is, the lyrics (which is a literary work and, therefore, has
its own copyright), the musical composition (which is a musical
work) and the recording of the music on any media (which is
a sound recording). Each of these elements is protected under
the Copyright Law as long as they are original. The Copyright
Amendment Act of 1994 also introduced a ‘Performers Right’ for
the benefit of various performers like singers. The composer of a
musical work is its Author. The owner of a Copyright in a musical
work has the exclusive rights to:
1. Reproduce the work in any material form including stor-

ing of it on any medium by electronic means.
2. Issue copies of the work to the public.
3. Perform the work in public.
4. Make any cinematographic film or sound recording in re-
spect of the work.
5. Make any translation of the work.
6. Make any adaptation of the work.24
Infringement of copyright in music has to be determined by

an assessment of whether the copying is substantial. Courts have
internationally held that if the copying is relatively slight, but on
closer examination if it becomes apparent that the piece copied
is the heart of the composition, it would lead to an actionable
infringement.25
A sound recording means recording of sounds on any medi-
um, copyright in which subsists, even though there is a separate
copyright of the work from which the sound recording is made.
However, the author of the sound recording has to make sure
that he has a licence to record the copyrighted material, which
could be a musical work or a performance, except material which
is in the public domain, folk songs for instance. If in the mak-
ing of the sound recording copyright has been infringed, then
such a sound recording would be deemed as an infringed copy.
The producer of the sound recording, which is the owner of the
copyright in the sound recording, has the exclusive right to make
other sound recordings embodying the same.
The term of the copyright in a sound recording subsists until
60 years from the beginning of the calendar year next following
the year in which the sound recording is published. The person

publishing the sound recording must display on the same and the
container, the name and address of the person who has made the
sound recording, the owner of the copyright in such work and
the year of its first publication.
The contravention of this obligation is punishable with im-
prisonment or fine. Even if the right is assigned or licenced, the
author of a copyrighted work shall always have a ‘special right’ to
claim authorship of the work and to restrain or claim damages in
respect of any distortion, mutilation, modification or other act
in relation to the said work, which would be prejudicial to his
ownership or reputation. Copyright is infringed when any kind
of dilution to the exclusive right or any profit is made from an
unauthorised use.
Section 52 of the Indian Copyright Act, 1957, lists out various
situations (including private listening of a sound recording or per-
formance in public as part of an official ceremony) which do not
amount to infringement of copyright. Anyone who is the author
of the work, automatically by operation of law, is the first owner
of the copyright. Registration of a copyright is not mandatory for
protection of copyright, but acts as an additional safeguard pro-
viding prima facie evidence that the person who has registered it
is the owner of the copyright.
Infringement of a copyright entitles the owner of a copyright
to all remedies, both civil and criminal. Civil remedies are avail-
able by way of injunction, damages and otherwise. Section 63 of
Chapter XIII of the Indian Copyright Act, 1957, states that any
person who knowingly infringes or abets the infringement of the
copyright in a work shall be punishable with imprisonment for
a term not less than six months, extendable to three years and
with a fine not less than `50,000 that could go up to `200,000.
An enhanced penalty is provided for subsequent offences. The
offence is cognisable and non-bailable. The police has power to
seize, without warrant, all copies of the work and all plates used
for the purpose of making infringing copies.
In 2012, significant changes were made to the Copyright Act
after strong lobbying by several artistes, led by lyricist Javed
Akhtar. As a result of this, the Act was amended significantly. The
main changes are encapsulated in Caselet 4a. The idea is to ensure
that all the people who contributed to making a song or album get
MUSIC 251
revenues from its repeated use across formats—digital or other-

wise. The biggest change, however, is that the new act makes rights
non-assignable. This protects artistes and their heirs.26
Piracy In India, piracy is a big issue in the music industry
and takes place through counterfeiting (unauthorised copying),
bootlegging (recording of a performance without permission)
and pirate recordings (unauthorised copying into compilations
and combinations). It is the unauthorised duplication of an origi-
nal recording for commercial purposes without the consent of
the rights owner. The IMI, a society established in February 1936
(as IPI), was promoted by major music companies to preserve
and develop the rights of phonogram producers. It spearheads
initiatives against piracy. IMI lists the various kinds of piracy as
follows:27
End User Piracy This is defined as:
• Copying the same software onto more than one computer.

• Copying office software onto a home computer.
• Loaning your software to someone else so that the person
can make a copy.
• Making a copy and selling the software to someone else.
• Selling old software.
Reseller Piracy This takes place when an individual or company

that buys one copy of software deliberately reproduces it with
fake certificates so that those who purchase it believe it is being
purchased from the company that developed it. Many fake copies
may have the same serial number.
BBS/Internet Piracy This refers to:
• The distribution of copyrighted software via the Internet

or a bulletin board system (BBS).
• P2P downloading.
• P2P networks that do not look at individual requests for
media to determine if they are for licenced materials or
not. Even though as much as 90 per cent of files shared on
P2P networks are copyright protected, making a copy of
copyrighted song available to others on P2P service with-
out a licence is illegal.
• Sharing uncopyrighted artistic creations and files over a

P2P network is completely legal.
• Downloading MP3s.
• Creating a compilation of songs from CDs and convert-
ing to MP3 does not in itself constitute infringement. In-
fringement occurs when you facilitate the distribution of
those files. Permission is always required unless use meets
criteria of Fair Use.
Trademark/Trade Name Infringement This refers to the im-

proper use of a registered trademark.
Other aspects of piracy regulation and enforcement have been
dealt in some detail in other parts of this book.28 One of the tech-
nological initiatives taken for the first time by the film produc-
ers was in the 2003 film Joggers Park. The music of the film was
released on a copy-control CD which prevented it being copied
on another CD (despite the fact that the production cost of such
a CD was three times the normal).
Copyright Societies
Chapter VII of the Indian Copyright Act, 1957 provides for reg-
istration of Copyright Societies. These are essentially collecting
societies to administer the rights of owners collectively. The two
main Societies in India which relate to the music industry are,
IPRS and PPL. The IPRS is a non-profit making body set up in
August 1969 and is registered under The Copyright Act, 1957.
The new Copyright Amendment has a few specific provisions
such as the requirements that the licences for musical and dra-
matic works incorporated in cinematographic work be under-
taken through copyright societies alone.
IPRS The IPRS administers and controls the performing rights,
mechanical rights and synchronisation rights in musical work on
behalf of its members as well as on behalf of members of other sister
societies with which it has reciprocal agreements. Its membership
includes virtually all Indian composers, authors and music
publishers, whose works are publicly performed. They execute
deals assigning their public performing right in respect of their
MUSIC 253
literary or musical works which they may produce in the future.

IPRS collects royalties from users of the music and thereafter,
disburses the same to the owners of the copyright, whose interest
it represents. The rates of royalty are decided collectively by the
members. The IPRS is affiliated to 202 world societies of authors
and composers. In April 2013, it had 3,379 members, largely
music companies, authors, lyricists and composers.
PPL PPL is an association of record companies and is also a
registered society under The Indian Copyright Act, 1957. It has
affiliates in 45 countries in the world and coordinates the col-
lection of royalties and grant of licences on behalf of each other.
Currently, PPL collects licence fees for 260 music companies
scattered throughout the country.
This distinction between creator’s right and associated rights
represented by IPRS and the music company’s rights repre-
sented by the PPL is historically self-created and not a man-
date under The Copyright Act. This creates some confusion. If
a company wants to broadcast a song from a Hindi film then it
has to obtain two licences for the same, that is, one from IPRS
for the lyrics and musical work and from PPL for the sound
recording. The practice of obtaining two separate licences is a
burden on the broadcaster and often gives an actionable right
to either of the two societies to proceed against the illegal and
unlicenced use.
This confusion has had some unexpected fallouts. One of the
major owners and publishers of music in India is Super Cas-
settes Industries (T-Series), with a 60 per cent share of the mar-
ket. It also controls (reportedly) about 70–80 per cent of new
music releases. In 2003, when T-Series had problems with PPL
and IPRS, it withdrew from the membership of both these bod-
ies. It then set up its own T-Series Public Performance License
(TPPL). TPPL is the owner of all the copyright in the company’s
repertoire. The TPPL was therefore required by all who wished
to play Super Cassettes’ music in public, that is, events, concerts
or use it in broadcasting on television, radio or a cinemato-
graphic film.
After having its own regime for over 4.5 years, TPPL reached
an understanding with PPL/IPRS in June 2008. According to
media reports, all usage of T-Series music on radio/satellite/ca-

ble/IPTV and so on will be licenced by TPPL while all usage in
public places, will be licenced by IPRS/PPL.
The Valuation Norms

The Backdrop
After breaking away from Magnasound, Suresh Thomas set up
Crescendo Music in 1992. Four years later, in 1996, he sold 51
per cent of the company to BMG Music, an arm of the German
Media conglomerate Bertelsmann. At that time, the `20 million
Crescendo was valued at `8 million. Assuming that profit after
tax was `2 million, Crescendo got a valuation of four times its
earnings.29 In those days there was only one listed company,
Gramco. There was very little history of either private placement
or primary issues in the music industry.
That is true even today. The only recent entry to the listed club
has been Tips Industries in the latter part of 2000.
The Variables
The variables that determine valuation in the music business are:
The Library
Usually, the valuation game in music works on libraries and
their potential to generate cash flow, which is then discounted
for the future just like in other media businesses. The big differ-
ence is that a library or catalogue is more valuable in music than
any other media. Films or television serials wear off or go out of
fashion after a couple of viewings. An S.D. Burman album or an
Asha Bhonsle hit, from the 1950s or 1960s, is being sold even
today. It holds appeal to a new set of consumers and the older
one keeps replacing their worn out software because they want to
continue listening to it. Notice how many singularly untalented
MUSIC 255
people make money from re-mixing popular old songs. How-

ever, a re-release of Buniyaad, the biggest hit on DD in 1987,
did not generate the same excitement (or revenues) 10–12 years
later. While the re-release of Lagaan four years later may gener-
ate excitement, the music of Lagaan is more likely to generate
steady revenues year after year.
A music library’s ability to generate money also depends on
how many distribution formats it is used across. Earlier there
were only retail stores. Now, there are radio stations, music
channels, the Internet, mobile, smartphones and tablets among
a host of devices or channels on which music can be heard. The
better the music company is at mastering these technologies,
the greater its chances of getting a good valuation with a good
library.
Artistes & Repertoire (A&R)

Artistes & Repertoire is usually a function within music com-
panies that looks for new talent. Think of it as the creative de-
partment. The stronger this arm, the better the hit record of the
company and therefore its revenue and valuation.
Table 4.1 The Shape of the Indian Music Industry
Format 2009 2010 2011 2012
Digital 2.6 4.2 5.2 6
Physical 4.5 3.2 2.6 2.3
Radio & TV 0.5 0.7 0.6 1.4
Public Performance 0.2 0.5 0.6 0.9
Total 7.8 8.6 9 10.6
Source: FICCI-KPMG Report 2013.

Caselet 4a The New Copyright Act and What it Means*
The Copyright Amendment Act, 2012 (Amendment Act)

came into effect on June 8, 2012, and gave effect to a number
of significant changes to law of copyright in India. The major
amendments are :
1. Earlier if any work (including an artistic work) was
produced at the instance of any person or pursuant
to a contract of service with any person, the person
commissioning the work would be deemed to be the
first owner of the work, and not the original author.
However, after the Amendment Act, in case such
work is produced and incorporated in a cinemato-
graph work, the author would be deemed the first
owner and will be entitled to exercise the copyright
over the same. In all cases other than cinemato-
graphic works, the original position continues to be
applicable.
2. With respect to the assignment of copyright, the
Amendment Act grants authors of literary and musi-
cal works incorporated in any cinematographic film
or in any sound recording (not incorporated in a cin-
ematographic film) with an un-assignable (except to
legal heirs and registered copyright collection socie-
ties) interest in future royalties. It should be noted
that this amendment does not prohibit or limit the
assignment of the work to the producer of the cin-
ematographic film or sound recording, but enables
the author to claim an equal share in royalties arising
out of any utilisation of the sound recording or cine-
matographic film (for any purpose other than display
in a cinema hall).
The best way to understand these changes is
through a hypothetical example. The movie Ta-
laash was produced byAamir Khan Productions
(Producer) . The musical score for the movie was
produced by Ram Sampath, the lyrics of its songs
(Caselet Contd.)
MUSIC 257
(Caselet Contd.)
by Javed Akhtar and the script/screenplay has

been produced by Reema Kagti and Zoya Akhtar.
Let’s assume that the Producer has the copyright
in the musical score, lyrics and script/screenplay
from each individual assigned to it for an aggre-
gate amount of `10 million.
Furthermore, let’s assume that the Producer then
sold the distribution rights to Reliance Entertain-
ment for `50 million, for distribution and exhibition
in cinema theatres (Cinema Rights), sold licences to
the music and lyrics of the songs to broadcasters for
an aggregate amount of `15 million (Music Broad-
cast Rights) and granted Colors the licence to broad-
cast the movie on its channel for an amount of `10
million (Channel Broadcast Rights).
In such a scenario, as per the un-amended Copy-
right Act, the individual artists—Ram Sampath,
Javed Akhtar, Reema Kagti and Zoya Akhtar—who
assigned their copyright to the Producer would be
entitled to receive the amount of `10 million alone,
and would have no further interest in the com-
mercial exploitation of their work. Pursuant to the
amendment, while the assignment of the copyright
in each artist’s work would be effective, such as-
signment would not disentitle them from receiv-
ing royalties for the commercial exploitation of the
work. Thus, while they would not be entitled to re-
ceive any share of the Cinema Rights, as these rights
are being granted for the display of the work in cin-
ema halls, they will be entitled to an equal share in
the other licence grants.
Thus, in the Music Broadcasting Rights, the Pro-
ducers, Ram Sampath and Javed Akhtar will be en-
titled to equally share the licence fee for the Music
Broadcast Rights, that is, each will be entitled to an
amount of `5 million. Similarly, the Producer, Ram
(Caselet Contd.)
(Caselet Contd.)
Sampath and Javed Akhtar and Reema Kagti and

Zoya Akhtar (together) will be entitled to equally
share the Channel Broadcast Rights, and can thus
claim a share of `2.5 million each. (It should be noted
that as Reema Kagti and Zoya Akhtar can be con-
sidered to have jointly authored the script/screen-
play, on the face of it, its appears reasonable that for
the purposes of the Amending Act they would be
considered one person for the purpose of comput-
ing their share to royalties, that is, they would jointly
participate in the sharing of royalties).
3. The Amendment Act has also sought to respond to
disconnect arising out of electronic rendering or de-
livery of content, by specifically enabling the owner
of a copyright in an artistic work to exercise control
over the storage of such works in electronic media
as well as the ability to render such works in either
three-dimensional or two-dimensional (as the case
may be) forms.
4. In addition to bolstering the roster of rights attached
to a copyright, the Amendment Act has also sought
to incorporate limitations tailored to electronic com-
munication of content by rendering the incidental
storage or display (performance) in the course of
electronic transmission or the storage and provision
of links and access to content as a non-infringing
activity. However, the latter limitation may be an
actionable infringing activity in case the storing or
hosting person can be reasonably expected to know
that the content infringes any person’s copyright or
such person continues to host and provide access
to the content after receiving a notice indicating the
same from the owner of the copyright. This provision
is similar to the notice and take-down process set
out in the Digital Millennium Copyright Act, 1998
of the United States of America, but in a significant
(Caselet Contd.)
MUSIC 259
(Caselet Contd.)
departure, places the onus on the owner of the copy-

right to establish the existence of the right, by permit-
ting the hosting entity to restore access to the content
unless an order from a competent court is issued to
restrain the same within a period of 21 days from
the date of receipt of the initial complaint. This pro-
vision offers internet intermediaries, such as hosting
sites and internet-service providers, with the means to
avoid any liability for copyright infringement for the
content submitted by their users, and thereby seeks to
promote the use and growth of user-generated media
content.
5. Other measures include the specific recognition of
the constituents of performer’s rights, pursuant to
which performers can control the audio and visual
recording, reproduction and communication of their
performance, and the commercial exploitation of any
recordings of the same, and determine whether or not to
permit incorporation of the same in a cinematographic
film. Performers have also been granted certain moral
rights (subject to prescribed limitation), which are
exercisable post-assignment, to ensure identification
with the performance and to precept any distortion
or mutilation of the performance. Additionally,
with broadcasters, the Amending Act requires the
broadcaster of copyrighted content or a performance
to obtain the consent of the owner or performer in
case it wishes to licence the reproduction of the same.
These amendments seek to provide performers, such
as dramatists or music performers, with right akin to
copyright, and to control the recording and use of their
performance, and to ensure that they are appropriately
credited for the performance.
6. The provision for grant of compulsory licences in
case of un-exploited works has been extended to
cover foreign works as well, and there are specific
(Caselet Contd.)
(Caselet Contd.)
provisions designed to enable the grant of licences by

the Copyright Board for the benefit of disabled users,
for cover versions and for broadcasting of content.
These amendments seek to ensure an equitable
balance between the copyright holder’s rights and
the interest of a broadcaster or artist in disseminating
content, by enabling the grant of licences in case a
copyright holder seeks excessive or exploitative terms
or is otherwise not available for negotiation of terms.
*Abhinav Shrivastava, an associate with the Law Offices

of Nandan Kamath in Bangalore. He specialises in Media,
Broadcasting and Technology regulation.
Notes
1. Much of the global data is from the IFPI recording industry numbers for
2013 and its digital Music Report 2013. The IFPI is the International Fed-
eration of the Phonographic Industry.
2. These numbers are from the FICCI-KPMG report and vary significantly
from the numbers in the last edition. This is because they do not include
the disorganised sector and also because the sources and their methods of
calculating are different. However for the sake of consistency I will stick to
the FICCI-KPMG numbers.
3. International Federation of the Phonographic Industry.
4. In the 1970s, it was a war against analogue tapes and home taping. In the
1980s, it got the law to grant a levy on blank CDs, which would compen-
sate for any ‘unauthorised’ copying.
5. This decision has been referred to in the radio chapter too.
6. FICCI-KPMG Report 2013.
7. Figures as in April 2013 from the Hungama website.
8. See Caselet 4a.
9. Before recorded discs, wax cylinders reproduced songs.
10. Gramco, GCI and HMV are used synonymously throughout this chapter.
They refer to the same company—Gramophone Company of India. It was
renamed Saregama some years back and is part of the RPG Group.
11. Till 1964, Gramco was managed directly by EMI representatives. By the
next year, The Gramophone Company of India (Private) Limited was
formed. In 1968, the company went public. In 1976, the foreign hold-
ing was further diluted to 40 per cent under the now defunct Foreign
MUSIC 261
Exchange Regulation Act (FERA). During the 1960s and 1970s, besides
gramophones and the records to play on, it manufactured record playing
equipment, music systems, radio receivers, wooden cabinets, wooden
flash doors, sewing machines and so on. That is because gramophones
used wooden cabinets and the company had excess capacity to make
wooden articles. During this time, Gramco also sold calculators and tape
recorders among other things as traded items made by third parties. In
March 2005 EMI sold the last of its 7.71 per cent stake in Saregama to
Reliance Energy, an investment company.
12. In 2004, Magnasound went into liquidation according to newspaper reports.
13. As far as I can make out Super Cassettes is still not a member of the IMI.
14. A large part of Gramco’s background and what happened in those days
has come from an interview with Chanda who finally managed to turn
Gramco around.
15. Lulla is currently chairman and managing director, Times Television Net-
work.
16. In the one channel-only state-owned Doordarshan era, Chayageet was one
of the hottest shows on television.
17. It later became Sony-BMG and has now become Sony Music again.
18. In 2007, BCCL sold Planet M to Videocon for `2 billion.
19. Estimates only pertain to its music business.
20. A lot of this depends on the agreement between the music company and
the production company. It is possible for a music company to pay a small-
er amount upfront and tie the producer in for a share of revenues.
21. Data from company website in April 2013.
22. All updates on the legal front from 2008 onwards were provided by
Abhinav Shrivastava, an associate with the Law Offices of Nandan Kamath
in Bangalore. Before this, till upto 2008, the legal section had been put
together by Anish Dayal, Advocate, Supreme Court of India and a specialist
in media and entertainment law.
23. Source: IMI website in April 2013.
24. Adaptation is defined in Section 2(a)(iv) as any arrangement or transcrip-
tion of the work.
25. See Elsmere Music Inc. vs. National Broadcasting Company (1980) 206
USPQ 913.
26. You could open the following link to see the main changes in the
amended act too: http://www.copyright.gov.in/Documents/CRACT_
AMNDMNT_2012.pdf
27. Refer to www.indiaimi.org
28. See ‘The Regulations’ in Chapter 3—Film.
29. Crescendo is now an Indian company since BMG sold its stake.
CHAPTER 5
Radio
The radio business really needs to move on.
I t is the one medium that reaches almost all Indians. Yet radio
in India has been stagnant for over four years now. Its story is
full of the promise of potential stymied by several factors—the
eccentricities of regulators, the conflict of interest between lob-
bying operators and the success of every other media. As luck
would have it, radio was set free along with all other media and
this, more than anything else, has made it the has-been, step-
brother to television, print and digital.
From 2008 to 2012, radio advertising has grown from `8.4 bil-
lion to over `12.7 billion in 2008 (see Table 0.2).1In a market with
the potential for more than 3,000 stations, India has only 242 pri-
vate FM radio stations. This is in addition to the 326 radio stations
from the state-owned All India Radio (AIR).2 According to an EY
report, out of the 30 odd private radio operators, only three are
profitable at a post-tax level.3 After 12 years of privatisation, radio
remains one of the smallest slices of the Indian media and enter-
tainment industry. The internet, with only a fraction of the reach of
radio, does twice as much in revenues. Radio’s share of the national
ad pie is just under 4 per cent while digital gets under 7 per cent.
At US$ 34.3 billion the global industry gets over 7 per cent of
global ad spend. The ratios vary by country. In the US, a good
benchmark market, radio gets under 11 per cent of national ad-
vertising spends.4
Radio’s poor growth in India is frustrating the industry and
listeners both. Especially because it grew very well for the first
few years after its somewhat messy privatisation in 2000. After
the second phase of licensing in 2006 it quickly went up to 242
stations. To grow further, offer variety, push down costs and
become profitable, the radio industry needs to scale up. To do

that, it needs to have more radio stations to operate. However,
the phase three of radio licensing, which should open up 839
FM stations has not been implemented yet. The policy and rules
for this phase were cleared by the cabinet in July 2011. There are
various reasons for the delay as you will read in the next section.
The biggest, however, is the whole fear about making a decision
on anything to do with spectrum, even radio spectrum, after the
telecom scandal which hit India over 2011 and 2012.5
With any luck, this phase will take off in the financial year
2013–14, according to the ministry of information and broad-
casting. If it does, then bigger issues, like those of localisation
and variety in content could get sorted. The plurality that radio in
its many hues was supposed to usher has not happened because
the industry is stuck dishing out the same music to everybody.
This happens largely because of its inability to create economies
of scale, thanks to regulation. For instance, one radio operator
cannot own more than one station in a city. This ensures that
everyone plays the same music because with only one station in
a city they need to go for the jugular on both listenership and
revenues. Ideally, a company needs to have at least 3–4 stations
in a city which play different genres of music and cross-subsidise
each other. The other issue is the inability to offer news—not just
political news, but simple weather and traffic updates too are not
allowed under current laws. The new policy allows for news from
AIR. (See section on The Regulations). It classifies things like cul-
tural events, weather, traffic conditions, or exam results and so on
under ‘non-news and current affairs’ and gives private stations
permission to broadcast these. So, the ability to create more talk
radio and localise better too is around the corner.
To be fair, there has been a big change in costs between last
edition and this one. Music royalty costs have gone down from
7–42 per cent of costs to 2–3 per cent. This is thanks to hectic
lobbying by radio operators that led to a Copyright Board ruling
in 2010 allowing radio operators to pay royalty costs of 2 per cent
of revenues.
The next round of growth in radio, therefore, will come af-
ter the auctions for phase three have happened. It will also come
because of the explosion in the variety of distribution platforms
available for radio. There is Internet radio, satellite radio, cable
RADIO 265
radio, radio on mobile and so on. These are opportunities that

are already delivering results for operators. In the US for instance
digital now brings in about 4 per cent all radio revenues.

The Issues
A quick surf between half a dozen stations will invariably throw
up the same popular chartbusters. Radio operators argue that
three things—the prohibition on broadcasting news and the ban
on having more than one station in a city (multiple frequencies)—
have impacted the variety of programming, the ability to localise
and profitability. That is somewhat misleading. None of these rea-
sons, except the inability to have more than one station in a city (or
the ban on multiple frequencies) is perhaps a serious impediment
to variety. The market for differentiated content is not yet signifi-
cant enough to demand attention. So the big issues are:
The Third Phase of Licensing

As mentioned earlier, the third phase of licensing will allow
operators to own more than one station in each city and therefore
offer variety. It will also allow for news broadcasts albeit with feeds
from AIR. But the policy has been held up over three things.6
One is the auction process itself. In phase I, in 2000, an open,
ascending auction ended in overbidding. Therefore, in phase II,
closed bids, with a reserve price of zero were used to good effect.
For phase III, the cabinet has recommended an open, ascend-
ing, e-auction. This is clearly in reaction to the 2G scam. The ‘e’
part helps transparency and no one opposes that. It is the ‘open,
ascending’ bit that could lead to overbidding, unsustainable li-
cence costs and impossible break evens, a la phase I, that worries
everyone.
Also in an open, ascending auction, the reserve price is fixed.
This is the highest bid for a town in a similar category in the
same region. So, for example, the phase II bid of `156 million for
Chandigarh, becomes the reserve price for, say, Saharanpur despite
the fact that the advertising potential and profile of the two cities
is completely different. More than 90 per cent of the licences to
be auctioned in this round are in tier 2 and 3 towns such as Am-
ravati, Muffzafarnagar or Salem. Ashish Pherwani, partner, EY,
estimates that the total cost base in these small towns has to be
in the range of `4–7 million if they are to make economic sense.
Since the prices in phase III will form the basis for phase IV, radio
operators are worried.
The second issue is frequency allocation. One of the things
holding back the government was the scarcity of spectrum, large
parts of which are with AIR or defence services. The industry’s
solution—the gap between two private radio channels is 800
MHz, reduce it to 400 MHz and auction the additional frequency.
The third issue: it is not clear whether the licences issued in
phase I will be renewed and at what price. With the licences set
to expire in another three years, most players going to investors
for phase III financing face a tricky question—how to make a
business plan if you don’t know whether you still have a licence
and at what price.
According to the EY report, only Radio Mirchi has consist-
ently reported operating and net profits for the last seven years.
Among the other listed players, Big FM (Reliance), My FM (DB
Corp) and Fever FM have reported EBITDA (earnings before, in-
terest, taxes, depreciation and amortisation) break even in recent
years. With licences due to expire soon, there is very little time
left to recoup accumulated losses estimated at `24 billion.
The ability to own more than one station in a city (not allowed
currently) and a lower licence fee will give a double boost to ex-
perimentation. The companies that are profitable, Radio Mirchi or
Big FM, have done it by having 50 or more stations and offering
a region or a state to advertisers. But, given that radio is a supple-
mentary, background sort of medium, rates are still a problem, with
some stations getting as little as `50–100 per ten seconds. For both
rates and ad spend to grow, therefore, expansion is an imperative.
People
The industry is just beginning to acknowledge this as an issue.
Its size doesn’t attract the best talent to the radio business. Plus,
there is not enough training available for radio professionals.
RADIO 267
Deepak Choudhary is managing director, Greycells. The firm

owns and runs EMDI Institute of Media and Communication. It
is already a popular destination for radio companies. It also of-
fers a six-month course on being a radio jockey, plus courses on
programming and management of radio stations. But students
are interested only in being jockeys, says Choudhary. He thinks
that the promise of radio is not being fulfilled because the back-
end is not ready. ‘In the next phase when news, community ra-
dio, multiple frequencies and so on are allowed, then the boom
will be different’, says he. In the EY report, talent acquisition and
retention was the fourth biggest challenge for the industry after
issues such as inability to deliver adequate returns and get effec-
tive rates.
The Trends and Opportunities

The biggest opportunities for radio come from the multiple dis-
tribution formats coming up all over. The others come from pro-
gramming and technological trends that the business is seeing
across the world. These offer the promise of higher penetration
and also of subscription revenues.
The Distribution Platforms

Besides FM, some other interesting variations of radio are emerg-
ing worldwide. Though not all of them are in India yet, they are
very likely to hit this market soon. More importantly, some of
them also have possibilities for subscription revenues.
Internet or streaming radio This is radio broadcast via the In-
ternet. It may or may not be over a broadband network. There
are thousands of such stations across the world. For example, in
February 2008, nearly 4,000 on-air radio stations reached listen-
ers with a streaming component in the US. That means one in
every three radio stations in America was reaching consumers
on a platform that did not exist 10 years ago. More than 89 per
cent Americans tuned into online radio in 2011 and roughly
half of them use only online portals and services to listen to
radio.7Pandora, a popular internet radio service in the US, had
reached 66 million users in 2012. 8
Satellite radio Satellite radio broadcasting operates very much

like satellite television. There are channels that are genre- or
country-specific. The Washington DC-based WorldSpace Inc.,
the parent company of WorldSpace India, is the pioneer of
satellite radio. It is credited with the invention of the medium.
Through its two satellites, AfriStar and AsiaStar, the company
beams music and information. In the US, however, the only
satellite radio service is SiriusXM. In 2012, it had 23.9 million
subscribers. SiriusXM offered 140 channels at subscription rates
ranging between US$14.49 a month to US$17.49 a month. In
December 2012, SiriusXM also launched an online service.
In India, WorldSpace offered a range of about 40 radio sta-
tions across genres—from jazz to classical, to old Hindi film
music and rock. These were 24-hour, advertising-free radio sta-
tions in languages ranging from Tamil and Telugu to Bengali,
Hindi and even French. WorldSpace also offered news and in-
formation channels like NDTV, Bloomberg and CNN, among
others. AIR too launched a satellite radio service for the Indian
subcontinent in 2002 on the WorldSpace platform. Just before
it shut operations in 2009, WorldSpace was reported to have
175,000 subscribers in India. Later Timbre Media, a Bangalore-
based start-up, acquired the licence to it and in 2012, Airtel
introduced WorldSpace channels on its DTH service. Now
Vodafone too offers it. The WorldSpace service now offers 10
channels of different kinds of music such as ghazals, classicals
and so on in different languages.
Radio over broadband9 Just like television or telecom, radio sig-
nals too can travel via cable or any other broadband network.
The stereo or the television can catch a radio broadcast via cable.
Many DTH and cable operators in India already offer this service.
HD Radio HD or hybrid digital radio is a technology that allows
AM and FM stations to transmit audio and data by using a digi-
tal signal embedded within a station’s existing analogue signal.
This allows a listener to hear the same show in HD (digital) or in
standard format. HD got FCC10 approval in 2002. However, HD
radio sets were very expensive—upwards of US$ 200—to start
with. Though prices have dropped to US$50 now, people still pre-
fer to listen to standard AM/FM signals in their cars or homes
instead of buying a new receiver for radio.11As a result hardware
RADIO 269
manufacturers now push car companies to install HD radios in

cars. Currently, there are over 2,000 radio stations broadcasting
in HD in the US.
Podcasting This allows anyone with a personal computer to
create a ‘radio’ programme and distribute it freely, through the
Internet to the portable MP3 players of subscribers around the
world.12 Podcasting helps make radio more portable, intimate and
accessible. Podcasts are not exclusive to iPods, but can be played
on a variety of generic media devices and computers. Podcast as a
term is used for any audio content downloaded from the Internet.
Virgin Radio13 was the first UK broadcaster to begin daily pod-
casting. For Virgin Radio, it was a new way of reaching listen-
ers and then getting advertisers in. Another example is the BBC
Radio Player which offers the archives of BBC radio and allows
audiences to ‘listen again’ to programmes they have missed or
want to hear again. In many ways this is time-shifting of con-
tent to hear it at a convenient time rather than the actual time of
broadcast.
In India, Big FM Hyderabad and Chennai began podcasts of
on-air shows on its website big927fm.com in 2008. Through this
new offering, Hyderabadis or Tamilians from anywhere in the
world could catch up with their favourite radio shows and jockeys.
Now almost every major radio network offers podcasts.
Globally, there is a lot of debate on which radio broadcast tech-
nology will dominate the market—analogue terrestrial, digital or
satellite. The one fact emerging is that internet radio advertising
works well, either on its own or in combination with regular ra-
dio broadcast. The response rates to an ad go up by 2 to 3.5 times
if internet radio comes into play according to one study. 14
The Other Opportunities

Besides distribution formats, there lie opportunities in content
formats, different audiences and in the way India is growing too.
Localisation Radio, particularly FM radio, is essentially a local
medium. The signals from an FM radio tower can rarely be re-
ceived beyond a 100 km radius. That makes it an ideal medium
to reach small, tightly focused groups and communities. When
Radio City talks about the condition of the roads in Bangalore or

Radio Mirchi about the traffic situation in Mumbai, it allows these
FM radio stations to tap into local advertising—from restaurants,
coaching classes, retailers to every mom and pop store in a given
locality—much more easily than TOI’s Bombay Times can. It is
on the back of local advertising, its ability to connect with the
music business and with new media that radio has grown in the
rest of the world. In the US, retail (read local) advertisers bring in
80 per cent of radio advertising.
In India, one estimate puts all local advertising at over `100
billion in 2012. This is growing at 10–20 per cent, against nation-
al advertising’s current growth rate of 7–10 per cent. To convince
first-time advertisers, the industry needs lots of players who can
spend money developing the market. The whole localisation
push works at two levels—localisation of content as well as get-
ting more local advertisers.
Localisation of content Most radio operators are currently
localising only at the language level. Big FM plays Bundeli
music in Jhansi, Dogri in Jammu and Bhojpuri in Ranchi to get
audiences to switch to FM. Tarun Katial, CEO, Reliance Broadcast
Network (which owns BIG FM) points out that in many cases,
it has revived the local music industry, as in Orissa, where
ringtones and downloads have made Oriya music viable. It is,
however, on the advertising front that there is far better connect.
However, localisation moving beyond language into the local
milieu and context will mean broadcasting local news. And that
is something that the law doesn’t permit currently. Though, the
third phase policy permits news. It allows private FM operators to
broadcast AIR’s news bulletins. More importantly, it categorises
exam results, local festivals, cultural events, traffic and weather
among several other things as ‘non-news and current affairs’. This
gives operators leeway to create talk shows and content centred
around more local events.
Getting more local advertisers ‘The advertiser interest in small
towns is driven not just from Mumbai and Delhi but from
many regional small and medium enterprises (SMEs) wanting
to go national’, says Katial. He points out to local brands such
as Wagh Bakri Chai (Maharashtra) or Verka cheese (Punjab),
which are big in their regions and spend a few million rupees
RADIO 271
on advertising every year. According to the EY report, about

40 per cent of the revenues of the radio industry came from
local advertisers. This figure is closer to 75 per cent in most
developed country markets.
There is another plus to the localisation story. Katial points out
that the listening pattern on radio in small towns is flatter, since
there is little commute time. ‘It means that unlike the metros ad-
vertisers can utilise all time bands, not just morning and evening’,
says he.
Not everybody agrees with the localisation bit though. ‘The
whole notion of local radio is outdated, it is coming from the US’,
says Rajesh Tahil, director, Hillroad Media, a content publishing
and outsourcing company. (Tahil was earlier head of Mid-Day’s
radio business.) In the US, radio stations were born as local enti-
ties. The popular talk-show host was someone you would bump
into at the mall, a la Frasier. With consolidation, radio in the US
is about large national behemoths. In India, radio (and almost
every other media) is growing the other way. The operators who
manage to make money are the large national players who have
25 or more stations. ‘Local is a non-starter in India. Only 2–3 ra-
dio players are not part of a large company’, points out Tahil. That
does not mean that local content or advertising does not happen
on radio. Only that it is not as big a driver.
Community radio Community radio is literally radio meant to
be broadcast over a short radius (5–10 km against 60–100 km for
FM) and to a tightly defined audience. A school or a university
could have a community radio station of its own, for news and
information that is relevant for the students and faculty. Mudra
Institute of Communications, Ahmedabad (MICA) has a com-
munity radio station for people in the surrounding villages to
help them deal with health and other issues.
However, community radio’s promise, that it would help
tackle developmental issues through mass media, remains un-
fulfilled. When the first round of privatisation happened in
2000, the government had mentioned that about 1,000 commu-
nity radio stations would be up and running by 2002. But bu-
reaucracy and the refusal to give licences to non-governmental
organisations (NGOs) meant that the community radio revolu-
tion did not happen.
In December 2006, the norms were liberalised to include ra-

dio stations by NGOs or non-profit organisations (NPOs) and
educational institutions. However, only NPOs working with the
community for more than three years qualify, on condition that
the station airs educational, developmental, social and cultural
programmes produced specifically for the local community. The
process though remains cumbersome. It takes clearances from
several ministries before a community radio station can be set
up. As a result, two years after the announcement of the policy,
only three of the 48 functioning community radio stations were
owned by developmental organisations. The rest were campus
community radio stations.15 In February 2013, there were 144
operational community radio stations in India. Most of them
were those operated by education institutions.16
Visual Radio This offers, through the radio’s digital display, im-
mediate access to factual content related to the songs playing, the
group or the singer playing, their background details, history.
There could be quizzes, participation in audience polls and even
the facility to download ringtones and wallpapers related to the
song. Mobile users can also buy tickets for concerts or movies
from which the song is being played. Several radio stations such
as Mirchi and telecom operators such as Vodafone offer visual
radio in select markets.
The Past
The Beginnings
In February 1920, the Marconi Company made the first successful
attempts at radio broadcasting in England. By November 1922,
the British Broadcasting Corporation (BBC) was on air with
regular programmes. In the US too, radio had become a popular
medium by the mid-1920s, on the heels of recorded music taking
off (see the chapter on Music). AM (amplitude modulation) radio
was the first to take off. FM, which is now the more popular form
of radio, did not become commercially viable till the late 1960s
and early 1970s.
RADIO 273
Radio Comes to India

In India, it was in August 1921 that TOI, in collaboration with
the Post and Telegraph department, broadcast from its Bombay
(now Mumbai) office a special programme of music at the
request of the governor of the province, Sir George Lloyd. He
listened to it in Poona (now Pune). Thereafter, as H.R. Luthra
documents in great detail in his book, Indian Broadcasting
(1986), the development of radio took place in fits and starts.
In 1923, after a meeting with manufacturers and the press, the
government set about preparing licences for radio broadcasting.
Meanwhile, temporary permission was given to the Radio Club of
Bengal in November 1923 and later to the Radio Club of Bombay
and the Madras Presidency Radio Club. Most of these stations
were operated by enthusiasts and were put together with small
budgets. They broadcast European music, stories, music lessons
and church services. To reach out to people, who had not even
heard of radio, six loudspeakers were installed at public places in
cities like Madras (now Chennai).
After a lot of public debate, it was decided that radio
broadcasting in India should be a private enterprise since it was
a capital-intensive business. In 1925, the government issued
a 10-year licence offering a five-year monopoly to the Indian
Broadcasting Company (IBC). The biggest shareholders in the
IBC were Raja Saheb Dhanrajgirji Narsinghirji and The Indian
Telegraph Company. Numerous individual shareholders held the
balance. Most of the employees were English.
On 27 July 1927, the Bombay station went on air, and was soon
followed by Calcutta (now Kolkata). About a fortnight before
the launch of these stations the IBC also launched a magazine,
Indian Radio Times. It carried details of programmes that would
be broadcast. These were classified as European and Indian.
European music was sourced under an agreement with the
Performing Rights Society, London, by paying a royalty of 150
pounds a year. Indian music was sourced from the largest music
company at that time, GCI, now Saregama. The GCI was content
with the publicity generated from its songs being played on the
radio. The initial hype and speeches around radio broadcasting
were full of the hope that it would be a good ‘public service’. Since
the feeling of Indian nationalism ran strong then, radio was a

much-censored medium. The (British) government banned the
broadcast of any political or industrial statement.
Unfortunately, for the IBC, people did not take to radio. From
about 3,000 radio sets in December 1927, the number crawled up
to barely 6,000 in one year and to a little over 7,500 by the end of
1929. The IBC had two revenue streams: advertising and licence
fees. While the first was minuscule, the second had the problem
of unlicenced sets estimated at 50 per cent of the total. As a result
half the listeners were not paying the licence fee of `10 per set
that IBC was banking on for its operating costs. By the end of
1928, it was clearly in trouble, having spent a chunk of its sub-
scribed capital on setting up the Bombay and Calcutta stations.
All India Radio is Born

In March 1930, when the company went into liquidation, the
government finally took over IBC. For some time it was called
The Indian Government Broadcasting Service, Bombay (and
similarly for Calcutta). By October 1931, even the government
found it difficult to run the service and it was shut down. When
there were protests from members of legislatures and the press,
the service was resumed in May 1932. To increase revenues the
custom duty on radio and wireless equipment was increased. The
Indian Wireless Telegraphy Act was amended to make stricter the
provision about evasion of licence fees. At the same time, in 1932,
the BBC had started its empire service with strong short wave
transmitters. This gave a fillip to radio. By the end of 1934, there
were over 16,000 licensees and 6,000 subscribers to the Indian
Radio Times. As a result, in the four years from 1930 to 1934, the
government actually made a profit on radio.17 This encouraged it
to invest more money in the medium. It was during this expan-
sion phase that the name All India Radio came into existence.
None of the dates or milestones can ever capture the joy that
AIR brought or the many struggles that went behind the scenes to
get good programmes on air. ‘Before independence, the whole of
the 1940s and maybe a little into the early 1950s, AIR was one of
the finest radio broadcasting organisations in the world,’ remem-
bers Ameen Sayani, one of the oldest and most familiar radio
RADIO 275
voices in India. Some of the best speakers, presenters, newsread-

ers and well-known people from the world of literature would
work for AIR, he remembers. It used to be a matter of pride to
do that. Old-timers remember Durga Khote, Ravi Shankar, Nau-
shad, Ustad Bismillah Khan and Hari Prasad Chaurasia, among
other big names.
Working for AIR presented some piquant cultural problems.
Some of the singers and musicians invited to AIR’s north Indi-
an studios came from what was politely called a ‘dubious social
background’. They were invited because there were not enough
musicians from ‘good families’ to fill in the need for program-
ming hours on AIR. It sounds hilarious now, but it was a serious
issue in those days. It meant that many families were not willing
to allow their young sons and daughters associate with radio. Lu-
thra illustrates this with an anecdote about Saida Bano, the first
woman announcer at the Lucknow station who compèred chil-
dren’s programmes in the early 1940s. To overcome the strong
opposition from her orthodox family, she lied to them. She said
that there was a separate entrance for the ‘immoral professional
singing girls’ and that she never came in contact with them.
Through all of this, the man who had the maximum influence
and impact on AIR’s functioning was the imperious controller
of broadcasting, Lionel Fielden, a programme producer from
BBC, a man who enjoyed seeing creativity flourish on radio. He
worked hard to keep bureaucrats out of programming decisions
and make AIR less of a government organisation and more of
a creative hotspot for talent. One of the things he did to ensure
that all kinds of amateurs came on to AIR was to have payments
made on the spot, that is, as soon as the artiste had finished his
performance in the studio. This was a big incentive for singers
and musicians who were hard up for cash.
All of Fielden’s efforts came to naught. By 1950s, the bureau-
cracy started raising its ugly head—not only in the administrative,
but also in the creative aspects of AIR. Soon, many administrative
people started coming into programming. They were often bril-
liant IAS officers. But they did not know anything about broad-
casting and they started dictating to people who did. ‘The qual-
ity of programming started deteriorating,’ thinks Sayani. Even
Fielden was aware of this. He said in his memoirs, ‘I had done my
utmost with careful rules of promotion to avoid the rise of clerks
who knew nothing about programmes. To keep rewards and priz-

es for those who possessed originality and vigour however intrac-
table their personalities may be. But I could not stop the growth of
red tape or the accumulation of a deadly routine.’18
AIR Stumbles
A classic case of interference during this period almost ren-
dered AIR without an audience. It came from B.V. Keskar, who
was the Minister for Information and Broadcasting from 1952–
61. Keskar disliked film music because he believed that it cor-
rupted Indian classical music. He decreed that AIR would not
play any film music. He then put in motion moves to encour-
age and nurture classical music on radio, through events like
the ‘Radio Sangeet Sammelan’. While that was great for classical
music, it was disastrous for AIR. ‘This happened at a time when
Indian film music was the best medium for the spread of the
national language and for the spread of togetherness. Banned
records were broken or thrown away. This was the golden pe-
riod when the giants of Indian music were creating some great
music. They did not stop producing but AIR was devoid of their
talent,’ remembers Sayani.
They went elsewhere. In the late 1940s, when Ceylon (now Sri
Lanka) became independent, some transmitters from the British
Southeast Asian command were handed over to Radio Ceylon.
It used these to run its commercial service in Hindi and English.
The Hindi service had nothing except Indian film music. Within
three months, almost everybody had switched to Radio Ceylon.
Soon the sponsors of a popular Western music show, ‘Binaca Hit
Parade’, wanted to experiment with a Hindi programme. That is
how ‘Binaca Geetmala’ was born. Keskar’s move had given birth
to one of the biggest hits on radio. Against an expected 50 letters
for the first show, ‘Binaca Geetmala’ got an astounding 9,000 let-
ters, remembers Sayani, who hosted the programme.
Though film music formed barely 10–15 per cent of the total
programming on AIR, it was (and is) extremely popular. Finally,
in 1957, AIR did respond with Vividh Bharti, but it was years
before it regained its former popularity with listeners. The pe-
riod throughout 1960s and 1970s were full of incidents like these.
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Commercials were not allowed on AIR till 1967 because earning

revenues was not considered important.
Radio’s Second Life

FM was first introduced by AIR in 1977. But the real thrust came
in 1993. That is when AIR allowed private companies to buy time
slots on AIR FM, brand it and make money through commercial
time. Mid-Day, TOI, Star Entertainment (no connection with
Star TV) and Vaishali Udyog acquired the first few slots on the
Mumbai station. It did not take off immediately. For every hour
of programming, operators were allowed nine minutes of com-
mercial ad time. On an average, even Times FM managed to get
only 90 seconds of advertising per hour. These companies had
paid `6,000 per hour as licence fees, and were spending anything
upwards of `15,000 per hour on programming. Therefore, they
were making a loss every hour.
Advertisers were not spending money on radio because they
had no way of gauging its reach or listenership. There was no
rating system for radio and the NRS came out only every four
years. It looked like radio’s first brush with privatisation would
fail. It did not. Listener response in the form of letters and call-
ins finally convinced advertisers and FM took off. From the `590
million in 1992, revenues more than doubled to `1,400 million
1998. Within a few months, FM was in people’s homes and cars.
‘Why did FM become so popular?’ asks Sayani rhetorically. He
has the answers. First, because there was the freedom to do anything
as long as one did not violate the programming code. The big ad-
vantage was that there was no pre-censorship. The new operators
were also playing Western music. It was not available on AIR but was
popular with youngsters. The freedom and the lively approach these
companies brought to radio created a breezy listening experience.
In spite of all this, unexpectedly and overnight in mid-1998,
private FM stations were pulled off air by the then Prasar Bharati
chief. Advertisers, media companies (TOI and Mid-Day) and lis-
teners were stunned. Its popularity and heavy lobbying by media
companies meant that the government could not ignore the me-
dium any longer. Especially as private television had been broad-
casting for more than six years by then.
Full Privatisation
In March 2000, the government held an open auction for 108
radio licences. Once a company had a licence it could run the
station on its own and pay licence fees (with 15 per cent annual
escalation as a built-in clause) to the government every year.
The bidding went awry because companies overbid. Against
the `800 million it was expecting to collect, the government
ended up making `3.86 billion. The highest price for a licence in
Mumbai was `97.5 million against a reserve price of `12.5 mil-
lion. Ten licences were sold in Mumbai, a city that got less than
`200 million in radio advertising then, for `975 million. The
Mumbai story was repeated nationally. It looked unlikely that a
market worth `1 billion could sustain the annual burden of the
licence fees (` 3.86 billion) plus operating costs, and yet enable
companies to make money.
Many radio operators now admit to being a little carried away
in the hype over the 15 days that the bidding took place. The real
reason was valuations. In those days, media companies were be-
ing valued at anywhere between 50–100 times earnings. Many
hoped to make up in valuations what they lost in licence fees and
operating costs. By the time they got the licences, valuations had
plummeted and many companies like Zee and Modi Entertain-
ment withdrew.
What was left were a handful of companies with 37 radio sta-
tions. Finally, only 21 channels in 12 cities became operational.
Considering India’s size—606 districts, 384 urban agglomera-
tions and 5,161 towns—this was clearly inadequate.
Fixing FM Privatisation (Round Two)

Private operators lost money but the market too expanded as
penetration, listenership, and revenues increased.19 From about
`1 billion in 2001, when privatisation took off, radio advertis-
ing revenues grew to over `3.6 billion in 2004.20 AIR alone saw a
doubling of revenues within the first year of privatisation, prov-
ing that it was good for everybody.
After much lobbying and debate, in 2003, the government fi-
nally appointed a committee to look at radio reforms and changes
RADIO 279
in licensing rules for the second phase. The Radio Broadcast Pol-
icy Committee under Dr Amit Mitra made 19 very sensible rec-
ommendations. If many of them had been adopted in the policy
that came out in July 2005, it would have pushed down the cost of
operating a radio station. There was one that suggested permitting
operators to own more than one station in a city, making local
radio networks with different programming on different stations
a possibility.
Another suggestion was doing away with the mandatory co-
location of radio towers, which had caused no end of trouble so
far. Indeed, this had been a major reason for a nearly two-year
delay in the launch of the Mumbai and Delhi stations during the
first phase of privatisation. The government insisted that radio
stations should get together and set up only one tower in the
metros. When companies could not see eye to eye, delays were
inevitable. Many such recommendations of the Radio Commit-
tee were ignored. Some liberalisation did take place, though,
like a 4 per cent revenue share instead of the annual escalating
licence fee.
As a result the second phase of radio privatisation which auc-
tioned 337 stations in 91 cities was much neater. The closed bid-
ding was completed in January 2006 and almost every company
that took part agrees that it was transparent and fair.
By June 2009, 248 stations were broadcasting across 91 cities.21
More importantly there are at least five large national players
with more than 25 stations each emerging. There is Kalanithi
Maran’s South Asia FM and Kal Radio (Suryan), Anil Ambani’s
Reliance Broadcast Network (Big FM), BCCL-owned ENIL
(Radio Mirchi) and India Value Fund-Music Broadcast owned
(Radio City).

In India radio coverage is available in AM mode (short wave/
medium wave) and FM mode. In terms of reach, MW broad-
casts cover almost 99 per cent of the Indian population and about
90 per cent of its geographical area, while FM broadcasts cover
about 40 per cent of the population and around 25 per cent of the
geographical area.
The Economics
Most radio companies are adopting an operating model at either
at the national level (30 or more stations), a key ad sales market
level (6 to 20 stations) or regional cluster level (5 or less stations).
Costs
The costs for a radio station just starting up in India include:
Licence fees In the first phase of privatisation, the annual licence
fee that private operators agreed to pay after a bidding process, came
with a built-in escalation clause: the fee increased by 15 per cent eve-
ry year, for 10 years. Under the new radio policy, this has changed to
a 4 per cent revenue share or 10 per cent of a one-time entry fee—
whichever is higher. According to the Ey report in 2012, licence fees
formed 5–8 per cent of the total costs of a radio station.
Set-up costs While individual station costs vary significantly,
the average investment to set up a radio station is `15 to `25
million for smaller stations and `40 to `50 million for a metro
or big city station.22 These costs usually include transmission,
studio equipment, station and office premises, office equipment
and networking infrastructure.
Operating costs Again, according to the EY report, the key
elements of operating cost are payroll (30–40 per cent of costs),
marketing (10–20 per cent of costs), music royalty (2–3 per cent of
costs), overheads and utilities (20 per cent of costs).
Revenues
The main sources of revenues are:
Advertising and sponsorship These remain the main revenue
stream for radio companies. In mature markets the split between
national and local advertising on radio is 20:80. In India the split
is closer to 60:40.
Subscription For satellite radio companies like SiriusXM, sub-
scriptions are the main source of revenue. There is perhaps a limited
RADIO 281
upside for subscription radio currently. In most media it is only after

audiences have had their fill of a variety of free content that they feel
the need to pay for content. While television has reached that stage
in India, radio is far from getting there.
The Metrics
The Buying and Selling Dynamics
AIR began by selling time, through sponsorship and spots, when
it was set up as a private company in 1927. In 1934, the govern-
ment disallowed advertising on AIR and re-introduced it only af-
ter the Chanda Committee recommended it in 1967. In that year
Vividh Bharti, the film music channel of AIR, began accepting
commercials. It made `1.9 million from ad revenue in 1967–68,
and the amount kept rising. There was only a fledgling DD for
competition within broadcasting. Newspapers, in fact, were the
main competition to radio. So happy was the AIR experience
with advertising that in 1982, even the primary channel started
accepting spots.
One media buyer remembers buying time on radio in the mid-
1980s. Most of the deals were made on contract with the central
sales office in Mumbai. To reach the metro audience, advertisers
used Vividh Bharti and later, FM. AIR’s primary channels, aimed
at different cities or areas, were better for reaching semi-urban
and rural India. In Gujarat, while Ahmedabad, Baroda and Rajkot
could be reached by Vividh Bharti, advertisers needed primary
channels to go beyond that. If they sponsored a programme they
got free commercial time.
The contracts were for a period of 13–52 weeks. Since radio
hardly had any competition, airtime and even sponsorships on
some really popular programmes—like Hawa Mahal or Modi Ke
Matwale Rahi—were booked six months in advance. Spot buys
or sponsorships rates also depended on the category. Prime time
on radio in 1980s, 8–9 am and 7–8 pm, was classified as Category
One. If an advertiser wanted a fixed time on Category One, there
was a premium of 25 per cent. This is in contrast to the current
scenario where average utilisation of advertising time on FM sta-
tions is just between 65–75 per cent.
As television began gaining popularity, radio was relegated to

targeting lower income audiences that did not have television or
could not read newspapers. While a toothpaste company would
advertise its toothpaste in newspapers and on television, the
tooth powder was put on radio. That changed again from 1993,
with FM. ‘Radio started fitting,’ says Apurva Purohit, a former
media buyer and currently CEO, Radio City. FM, a largely metro
phenomenon then, had given advertisers another avenue to talk
to city audiences.
The Changes
As more channels get into the game, radio advertising is bound
to change in two ways. One, as the number of channels grows
they will have to specialise in something and get focused adver-
tising. Most advertisers buy time on radio in monthly contracts
of anywhere between 3–10 spots of 10 seconds each, or maybe
more, a day. Depending on the station, the time of day and the
show, the spots could cost anywhere from `400 to `2,000 per 10
seconds. As the channels increase in number and specialise in
different genres of programming, ‘the qualitative calls in buying
will come in,’ thinks Arpita Menon.23
For instance it makes for a better fit to advertise Smirnoff
Vodka when people are driving home in the evening rather than
when they are driving to work. When stations start specialising,
advertisers could know that, for instance, listeners of old Hindi
film music are most likely whisky drinkers. Or, hard rock listen-
ers are also more likely to buy jeans. They could then advertise
only on specific channels and time-bands.
The second potential change is the cross-media buys that ra-
dio, a much smaller medium than print or television, could force.
BCCL owns TOI, India’s largest selling English newspaper, plus
Radio Mirchi. These ‘combos’ as media planners call it will turn
out to be more interesting and will offer more value to adver-
tisers. If a good deal in Mumbai Mirror also gets you spots on
Radio Mirchi at an attractive rate, advertisers stand to gain. Alter-
natively, a buyer could combine it with television from a media
company like Sun TV that owns television news channels as well
as radio stations.
RADIO 283
In practice, though, most media companies do not cross-sell their

brands and even those that do, do so half-heartedly. For example
at ENIL (an arm of BCCL), out-of-home, radio or events are not
sold together, says Panday. ‘What is shared is access to clients and
knowledge of clients,’ says he. Nevertheless many radio companies
offer activation or on the ground promotions along with a radio
campaign. ‘In many small towns, more than reach radio is a great
activation medium,’ says Keerthivasan24 former CEO of Fever FM.
(See Chapter 9—Events for more details.)
The Measures
Currently the measures available are:
AIR The state-owned radio company has an in-house Audience
Research Unit. It conducts research on listening habits. The unit,
which is spread across India, uses interviews, panel studies and
other regular research tools to arrive at numbers on listenership
and patterns. Since 1937 it has been the only source of informa-
tion on radio listenership or even radio sets in India until NRS
came along in 1980s. In 1998, under pressure from advertisers,
AIR evolved a system for measuring ratings of programmes on
radio—radio programme listenership (RPL) ratings.
Indian Listenership Track or Wave The Indian Listenership Track
(ILT), is a syndicated radio study, carried out by MRUC and its
partner agency, ACNielsen ORG-MARG.25 The research is based
on Yesterday Listenership (YDL) data in Mumbai and Delhi. How-
ever there has been no ILT research released after 2006.
Adex India This is a division of TAM Media Research’s Radio.
Adex looks at advertising patterns—volume, value, clusters of
advertisers—on radio. (See Table 5.1a and Table 5.1b.)
Radio Audience Measurement or RAM In 2007, TAM also rolled
out Radio Audience Measurement or RAM, a rating metric. This
diary-based method, starting with three cities, now covers 13.26
It measures listenership on radio across devices such as mobile
phone and car radios among others.27
So far most studies have focused on listenership. This could
be according to demographics, city, advertiser or station. This
data could provide all sorts of insights into how the market is
shaping up.
The Regulations
Currently, the Prasar Bharati Corporation, an autonomous body
that comes under the MIB, regulates AIR. All forms of private
radio broadcasting are regulated by The Telecom Regulatory
Authority of India or TRAI, the broadcast regulator. Both are
overseen by the MIB, Government of India, which is in charge
of all media regulation.
The History
This part is best understood through some regulatory milestones.
1964: Indira Gandhi appointed former auditor general A.K.
Chanda to look into the problems of radio and television. The
Chanda Committee gave its report in 1967. Some recommenda-
tions like permitting commercial broadcasting on a limited scale,
and the delinking of DD from AIR were accepted. The commit-
tee also pointed out the very high level of overstaffing in AIR. It
recommended using commercials on both radio and television
to generate revenues.
1966: The Vidyalankar Committee was set up to recommend
ways to use radio for improving the state of rural India. It sug-
gested extending the duration of rural programmes. This eventu-
ally led to the formation of the farm and home unit at 10 AIR
stations to provide timely and relevant information on crops,
weather and other technical matters to farmers.
1977: The B.G. Verghese Committee was asked to look into the
issue of granting autonomy to DD and AIR. The subsequent re-
port in 1978 suggested the formation of the Akash Bharati, a na-
tional broadcast trust to look after both AIR and DD. As a result,
the Prasar Bharati Bill came into Parliament in 1979. It became
an Act only in 1997 (see Chapter 2—Television). This is also the
year political parties were allowed to use radio and television for
electioneering.
1999: The privatisation of FM was announced and the policy
unveiled.
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FM Begins
In March 2000, the government invited the private sector into
FM radio broadcasting by opening up the frequencies in the FM
band (87.5–108 MHz). In this Phase One of FM radio privatisa-
tion, operators were invited to bid for a 10-year licence to set-up
and operate FM radio stations. The original plan was to set-up
108 FM radio frequencies across 40 cities. 101 bids were received,
aggregating to a licence fee of approximately `3.86 billion.
The Phase One Policy

When radio licences were auctioned in 2000, the following regu-
lations were applicable:
1. The licence fee to be paid to the MIB shall be increased by

15 per cent every year (compounded).
2. Ban on news and current affairs programming.
3. Advertising had to follow the advertising code.
4. While a company could own any number of stations, each
station had to be unique in content. That meant the same
show could not be broadcast over, say, all of Radio City
stations, at the same time.
Privatisation Phase Two28

The unusually high licence fee structure and year-on-year an-
nual escalation of 15 per cent hampered the growth of the me-
dium. Operators lobbied hard for a change in policy. As a result
in 2003 the government set up a committee under Amit Mitra
of FICCI to look into radio licencing and other issues of the ra-
dio industry. The committee was also supposed to suggest ways
out of the problems that had cropped up during the first phase.
The policy for expansion in phase two was formed on the basis
of this committee’s recommendations which were announced
in July 2005.
Following are some of the important points that the commit-
tee made that then became policy:
1. It marked a shift from the annual licence fee regime to a 4

per cent revenue share or 10 per cent of the reserve one-
time entry fee limit—whichever is higher. Gross revenue
for this purpose is calculated as gross revenue without de-
duction of taxes.
2. The licence is valid for a period of 10 years from the effec-
tive date and is non-transferable.
3. The permission is governed by the provisions of the
Telecom Regulatory Authority of India Act, 1997, Indian
Telegraph Act, 1885 and Indian Wireless Telegraphy Act,
1933.
4. The permission holder or radio company cannot out-
source, through any long-term production or procurement
arrangement, more than 50 per cent of its total content, of
which not more than 25 per cent of its total content can be
outsourced from a single content-provider.
5. No permission holder can hire or lease more than 50 per
cent of broadcast equipment on a long term basis.
6. The permission holder has to ensure that there is no
linkage between a party from whom a programme is
outsourced and an advertising agency.
7. The permission holder cannot carry out networking of
its channels with any other channel. What this means is
that a radio company is not allowed to broadcast the same
channel that it has in one city, in another one. However,
networking or broadcasting of the same channel is allowed
if the radio company has licences in C and D category
cities (essentially smaller towns). It could then use the
same channel in another C or D category city within the
same region.
8. Every applicant and its related entities is allowed to bid
for only one channel per city provided that the total num-
ber of channels allocated to an applicant and its related
entities does not exceed 15 per cent of the total channels
allocated in India.
9. Certain companies are disqualified from getting permission
for FM licence. These could be companies not incorporated
in India, a company which is an associate of or controlled by
a Trust, Society or NPO, a company controlled by or associ-
ated with a religious body or a political body.
RADIO 287
10. In the applicant company, total foreign investment, in-

cluding FDI by OCBs/NRIs/PIOs and so on, portfolio
investments by FIIs (within limits prescribed by RBI)
and borrowings, if these carry conversion options, shall
not exceed 20 per cent of the paid up equity in the entity.
More than 50 per cent of the paid up equity excluding eq-
uity by banks/lenders must be held by Indian individuals
and corporates. The majority shareholders must be vested
with the management control. Only Indian residents can
be directors and all executive personnel must be Indian
residents.
11. The majority shareholder can only transfer shares chang-
ing ownership of the company with prior permission of
the MIB. No permission was originally allowed for the
first five years from the date of operation of the station.
In September 2008, the Union Cabinet allowed FM radio
broadcasters to set up subsidiaries, amalgamate or de-
merge through transfer of shares of companies less than
five years in operation. The relaxations for the creation of
subsidiaries and mergers within the same group are sub-
ject to the condition that the promoters must continue to
remain the majority shareholders with at least 51 per cent
of the total shares. The new entities, thus created, would
have to maintain the FDI component as per the norms
and the grant of permission agreement. In addition, not
only will the new company (demerged or amalgamated)
have to sign a fresh agreement with the government on
identical terms for the remaining licence period but the
transfer of shares would also be allowed only once during
the first five years of operationalisation.
12. If during the currency of the permission period,
government policy on FDI/FII is modified, the permission
holder is obliged to conform to the revised guidelines
within a period of six months from the date of such
notification.
13. In the event of a permission-holder letting its facilities be-
ing used for transmitting any objectionable, unauthorised
content, messages or communication inconsistent with
public interest or national security or failing to comply
with other directions mentioned in the tender document,
the permission can be revoked and the permission holder

shall be disqualified to hold any such permission in fu-
ture, apart from liability for punishment under other ap-
plicable laws.
14. In the event of any question, dispute or difference aris-
ing under the Grant of Permission Agreement it shall be
referred to the TDSAT, New Delhi.
Privatisation Phase Three

Through an order dated July 25, 2011, the Ministry of Informa-
tion and Broadcasting (MIB) has approved and issued the policy
guidelines for Radio FM (Phase-III). Its key points are:
1. The allocation process is now in the form of an e-auction

and not closed bids in response to a tender.
2. The minimum net worth for an applicant company will
vary in accordance with the city of application, from `5
million lakhs to `100 million.
3. The single largest Indian shareholder (either as an individ-
ual, a Hindu Undivided Family (HUF) or as a company or
group of companies with the same management) should
hold at least 51 per cent equity in the applicant company.
4. All directors, key executives, CEO and head of the chan-
nel to be resident Indians.
5. The period of permission/licence is 15 years, and is non-
transferable or sub-licensable.
6. In the states of the North East, in Jammu and Kashmir and
the Island states, annual fee of 2 per cent of gross revenue
or 1.25 per cent of the successful bid amount (whichever
is higher) will be applicable. Otherwise the annual fee is 4
per cent of gross revenue or 2.5 per cent of successful bid
amount (whichever is higher).
7. A single entity cannot hold more than 15 per cent of all
channels allotted in the country (excluding channels lo-
cated in Jammu and Kashmir, the North Eastern States
and Island states) and more than 40 per cent of the total
channels in a city, subject to there being a minimum of
three different operators.
RADIO 289
8. FDI limit as per the policy has been increased to 26 per

cent (the Consolidated FDI policy of 2012 reflects this
change).29
9. Any transfer of shares in a permission holding company
or reorganisation within a group of companies is only
permitted with the consent of the MIB.
10. The allotment of channels shall be by e-auction, and the
coverage of issuable licences has been extended to all cities
in India.
11. Radio channels are not permitted to carry any news
or current affairs programs, but are permitted to carry
unaltered news bulletins of All India Radio. However,
information concerning sports events (excluding live
coverage), live commentaries of sporting events of a lo-
cal nature, information concerning traffic and weather,
or cultural events and public announcement (health
alerts or announcement concerning civic amenities
or calamities) by local administrative authorities are
specifically excluded from the purview of news and
current affairs programs, and can thus be carried by
licenced FM stations.
12. At least 50 per cent of programmes broadcast must be
produced in India
13. The licence holder can outsource content production and
lease content development, provided such activity does
not impact the right of the licence holder to act as an FM
broadcaster or have any effect on the control of the FM
channel by the licenced company.
14. Networking of channels is permitted within a licenced or-
ganisation’s own network in India, provided that at least
20 per cent of the broadcast content (which may include
advertisements or content spoken by a radio jockey) in
any day is in the local language and promotes local con-
tent. Networking between channels operated by two enti-
ties is not permitted.
15. Co-location of transmission equipment is not mandatory,
immaterial of whether the transmission infrastructure of
Prasar Bharati is available or not.
16. The licence to operate an FM channel is also subject to any
other terms and conditions prescribed under the Wireless
Operational License, which the licenced company must

obtain from the Wireless Planning and Coordination
Wing of Ministry of Communications.
Community Radio
In December 2002, The Government of India approved a policy
for grant of licences for setting up community radio stations (CRS)
to well-established educational institutions in India. In December
2006, this was liberalised to include NGOs or NPOs having a proven
record of at least three years of community service. The organisation
must be a legal entity like a registered society. Individuals, political
parties and affiliate organisations are not allowed. The permission
is for a period of 5 years and is non-transferable. A bank guarantee
of `25,000 has to be submitted to ensure timely performance of the
permission agreement. The content of the CRS is subject to strict
restrictions and should be of relevance to the community. CRS are
expected to cover a range of 5–10 km.30
Satellite Radio
Even though a satellite radio service was in operation in the coun-
try, there was no policy or regulatory framework for this sector as
against clearly laid down policies for other media segments. This
gave rise to various issues, such as a level playing field between
satellite and private FM Radio, regulation of broadcast content,
licence fee, interoperability requirement in case of a new satellite
radio service provider and so on.
The Amit Mitra Committee in its report on private sector FM
broadcasting had suggested that a satellite radio policy should be
laid down by the government. In December 2004, TRAI brought
out a consultation paper on issues relating to Satellite Radio
Services. It also held an Open House discussion on the issue in
February 2005 in Delhi. Based on the responses received from
various stakeholders on the consultation paper and in the Open
House discussion, the Authority had sent its recommendations
on ‘Issues relating to Satellite Radio Service’ to the government
in June, 2005. The MIB has informed that the recommendations
made by TRAI have been accepted with some modifications by
the Government of India. Accordingly, the Ministry has framed
RADIO 291
the draft Satellite Radio Policy Guidelines on which TRAI has

sent the final comments.
The main features of the draft policy are:
1. It makes a distinction between provision of satellite radio

service (that is, carriage of radio channels) and provision
of content (radio channels) to such satellite radio service
providers.
2. Accordingly, two different types of licences or permis-
sions are envisaged. One type of licence is for providing
the satellite radio service for carriage and broadcasting of
channels and the other permission entitles the permis-
sion holder to get registration for satellite radio channels
which he will in turn provide to satellite radio service op-
erator for broadcasting.
3. It permits a satellite radio service provider to hold the
permission for registration of satellite radio channels also.
4. The licence will be for a period of 10 years initially, with a
provision for further extension for 10 years.
5. The licensee will have to pay an annual licence fee of 4 per
cent of gross revenue. The draft guidelines also provide
for appropriate obligation on the licensee to roll out the
service within one year of getting the licence.
Till April 2013, this policy was still in limbo.
The Formation of AROI

In 2006 the Association of Radio Operators of India or AROI was
set up to lobby on the industry’s behalf and to act a bridge with
advertisers and investors. All radio operators are members.31
The Valuation Norms

The Backdrop
After the first phase of privatisation, a Canadian Financial
Institutional Investor (CPDQ), picked up a 20 per cent stake in
Radio Mirchi. In 2005 GW Capital picked up a 75 per cent stake
in Music Broadcast Private Limited’s (MBPL’s) Radio City. The

details on neither are available.
In 2006, Entertainment Network, the BCCL subsidiary that
owns Radio Mirchi raised funds through an IPO. In 2006 the
Kuala Lumpur based Astro All Asia Networks joined hands with
NDTV and Value Labs to buy out Living Media’s Red FM brand
in 3 cities. Astro was aided by Sun Network’s South Asia FM. In
the same year BBC Worldwide along with investor Rakesh Jhunj-
hunwala picked up an undisclosed stake in Radio Mid-Day West.
So, by the time the stations from the second phase were be-
ing launched, there was a better sense of the valuations around
the radio business in India. Radio valuations are done using the
same metrics as in television broadcasting. Listenership, reach,
the number of stations a network has, management bandwidth,
and the ability to scale are the factors that investors look for. Un-
like television, there is no library valuation involved in radio, un-
less a station creates in-house programming.
The Variables
Some of the key variables that come into play are:
Market Growth
As mentioned across this book, this factor is true for most sectors
in India. Typically, Indian companies would get a better multiple
because of the double-digit growth rate that most media show.
However, given the uncertainty over the third phase of licensing,
it is not clear if this growth premium would hold, at least in the
short term.
Inventory Utilisation
This means the capacity utilisation of advertising time available
on a radio station or network. The capacity or inventory utilisa-
tion only looks at ad time that is paid for by an advertiser and not
the time used for barters or self-ads. The time allocated to ad-
vertising varies from 8–12 minutes in one hour of programming
RADIO 293
time. During prime time this figure could go up to 15 minutes in

one hour. According to the EY report, the average utilisation for
most stations was 65–75 per cent. The actual inventory utilisa-
tion varies across stations. It depends on number of stations, the
city, ability to get new advertisers and the availability of robust
measurement metrics. For example, the 10 largest cities recorded
a utilisation of 85 per cent.32
Revenue Mix
There are various ways of looking at revenue mix when it comes
to radio:
Local versus national Though radio is a local medium, inves-
tors for some reason are more comfortable with radio companies
that have a lot of national advertisers who use them for their lo-
cal needs. According to the EY report, on an average, 35–40 per
cent of revenues came from local advertisers while the remaining
came from national ones. Larger radio companies had a higher
share of national advertiser revenues.
That is a fairly healthy national to local split. National advertisers
are bulk advertisers who take large chunks of airtime at discounted
rates. But in a slowdown, they are the first ones to withdraw. Local
advertisers, on the other hand, are more likely to buy less time,
but pay card rates, making them high-margin advertisers. The
biggest change in the Indian market is the growth in the numbers
of small local and regional advertisers on radio, TV and print. As
their numbers grow, they become a good alternative to national
advertisers. (See ‘The Shape of the Business Now’.)
Traditional versus non-traditional The Internet, emerging digi-
tal technologies, cross-media sales and activation could bring
in more to the ad pie for a radio company. Therefore, a radio
company that has its stations on podcast, the Internet, cable or
on satellite radio among other platforms is likely to get a better
multiple.
Big versus small stations The term ‘big stations’ usually refers
to those in large metros such as Mumbai or Bangalore and
‘small stations’ to those in smaller towns, say Kolhapur or Surat.
The ability of each to earn revenue differs and so too does the
valuation. A company with a good mix of big and small stations

is likely to get a better valuation than one with a concentration
of either. For example, though ENIL has focused hard on
metros it has also picked up lots of non-metro licences in towns
with a high growth potential. That is because typically while a
Mumbai market is more lucrative, it is also by definition more
competitive. The investment required to milk a market such as
Mumbai will be higher than the one required to get more out of,
say, Hissar or Indore.
Table 5.1a The Top Advertisers on Radio—Product Categories
Top 10 Super Categories in 2010 on Radio

1 Services 15
5 Retail 7
7 Education 5
8 Auto 3
10 Telecom Products 3
1 Services 18
4 Retail 7
6 Auto 5
(Table 5.1a Contd.)

RADIO 295
(Table 5.1a Contd.)

8 Education 4
9 Telecom Products 2
10 Durables 2
1 Services 23
4 Retail 6
5 Auto 5
7 Education 4
9 Building, Industrial & Land Materials/Equipments 3
10 Durables 2
Source: Adex India, a division of TAM Media Research.

Table 5.1b The Top Ten Advertisers on Radio—Companies
Top 10 Advertisers in 2010 on Radio

2 Vodafone Essar Ltd 1
3 Tata Teleservices 1
5 Nokia Corporation 1
6 Ministry Of Health & Family Welfare 1
(Table 5.1b Contd.)

(Table 5.1b Contd.)

8 Coca Cola India Ltd 0.9
9 Idea Cellular Ltd 0.9
10 Quick Heal Technologies P Ltd 0.8
1 Tata Teleservices 2
2 Ministry Of Health & Family Welfare 1
6 Nokia Corporation 1
7 Life Insurance Corp Of India 1
8 Tata Motors Ltd 0.9
9 Hindustan Lever Ltd 0.8
10 Cadburys India Ltd 0.8
2 Gujarat Tourism 1
4 Tata Motors Ltd 1
5 Bharatiya Janata Party 1
6 Life Insurance Corp Of India 1
8 Hindustan Lever Ltd 0.8
9 Pantaloons Retail India Ltd 0.8
10 Coca Cola India Ltd 0.8
Source: Adex India – a division of TAM Media Research.

in advertising seconds on radio.
RADIO 297
Notes
1. These figures are from the FICCI-KPMG report for 2013.
2. The figures for total radio stations are as per a TRAI press release in
September 2012. The AIR figures are from its website.
3. Poised for Growth, FM Radio in India, EY. The Report was released at a
Confederation of Indian Industry (CII) roundtable on the radio business
in December 2012.
4. Zenith Optimedia and Radio Advertising Bureau (US) website.
5. The scandal involved the allocation of spectrum to telecom companies and
involved several ministers, bureaucrats and top telecom company managers.
6. A large part of this section is edited excerpts from a story I did for Business
Standard. What is Ailing the Radio Industry? Business Standard, 1 January
2013.
7. The State of the News Media, 2012.
8. Digital Music Report 2013, IFPI – The International Federation of the
Phonographic Industry.
9. Radio signals could travel over narrowband or broadband connections
which may or may not provide Internet. This part specifically refers to ra-
dio over broadband only.
10. FCC is the Federal Communications Commission, the media and telecom
regulatory authority in the US.
11. The State of the News Media, 2013.
12. ‘Will the iPod kill the radio star? Profiling podcasting as radio.’ Richard
Berry in Convergence: The International Journal of Research into New
Media Technologies, 2006.
13. Virgin Radio was acquired by India’s ENIL, the company that owns Radio
Mirchi.
14. Internet radio advertising impact study, a Parks Associates white paper for
TargetSpot. (endorsed by the Internet Advertising Bureau and the Radio
Advertising Bureau in the US).
15. Vinod Pavarala and Kanchan K. Malik’s book Other Voices: The Struggle
for Community Radio in India by Sage Publications (2007) and the website
of Community Radio India: http://www.communityradioindia.org/index.
html
16. Ministry of Information and Broadcasting website. http://mib.nic.in/de-
fault.aspx
17. According to Luthra, the radio business made a profit of `0.22 million on
revenues of `1.28 million.
18. Quoted from Luthra (1986) p. 157.
19. According to TRAI data, in 2003–04, 20 licensees had total revenues of
`1.15 billion and expenses of `2.37 billion. So they were all making huge
losses. Of the expenses, licence fees alone amounted to `1.08 billion. TRAI
is also the broadcast regulator.
20. This figure for radio advertising revenues is from the numbers Lodestar Me-
dia (now Lodestar Universal) had put together for earlier editions of this
book. Even if we factor in discounts, the total ad spend on radio was at least
`2.7 billion. AIR alone had revenue of `1.58 billion in 2004–05 according to
a press release by the Ministry of Information and Broadcasting.
21. There is a discrepancy between the 242 station number that TRAI gives
and the actual number of stations that became operational after phase two.
In fact in between TRAI mentioned a figure of 245. So the actual number
is a bit hazy.
22. EY report (2008). The costs of set up have remained largely the same.
23. She was formerly the head of Lodestar Media (now Universal Lodestar)
and is currently with Star India.
24. He was formerly CEO of Fever FM and is currently studying overseas.
25. MRUC is the Media Research Users Council.
26. This was up to 2011. This is going by the data available on the TAM website
in April 2013. TAM Media Research provides metrics for the television
and radio business.
27. For more details log onto the TAM website and go to the section on RAM.
http://www.tamindia.com/tamindia/Images/RAM_Baseline_Study_
Universe_Update_2011.pdf
28. From regulation phase two to satellite radio, the regulation section was
put together by, largely, by Anish Dayal, Advocate, Supreme Court of India
and a specialist in media and entertainment law. From 2008 onwards all
updates have been provided by Abhinav Shrivastava, an associate with the
29. FDI is foreign direct investment.
30. Detailed policy guidelines and other details are available at http://mib.nic.
in/CRS
31. http://www.aroi.in/index.htm
32. These calculations assume a 13-minutes-per-hour, 17-hour day from 7 a.m.
to midnight. EY report 2012.
CHAPTER 6
Digital
Stop, take a breath digital. Think about where you are headed.
A t a two-day workshop on digital marketing by afaqs! Cam-

pus in 2013, the anti-offline feeling was strong. The train-
ers, good minds from some of India’s best agencies, were ut-
terly contemptuous about all other media, including TV and
print. The young audience seemed to mirror their opinion. So
do many people in the media and entertainment industry, me-
dia students and other people I meet in the course of my work.
All the ‘old’ media are viewed as dinosaurs that will die. And
in conversation they are already dead. Young people seem to
think that digital is where the world exists and everything else
doesn’t matter. Not only that, the bosses at some of India’s larg-
est media buying agencies talk as if digital death is imminent.
This is silly.1
TV reaches over 740 million people, print reaches 354 million
and digital reaches just over 200 million.2 Advertisers spent more
than 90 per cent of their money on all forms of mass media last
year. Only 6 per cent went to digital. This proportion has re-
mained largely constant for the last many years. There is not a
single digital company among India’s largest media companies,
as yet.
This is not to negate the growth of digital or its power. It is the
biggest phenomenon of our times. All the same, there is need for
some perspective. Most people like to believe that digital is some
kind of utopian ideal in media consumption and freedom.
It isn’t, for four reasons.
One, digital operates much like any other medium. Just like
any other media, it needs large audiences and scale for a com-
pany to make money.3As with other segments of the media
business, as more people spend more time on it, the greater will
be the ad rupees that digital will attract. Digital is different in
texture of course. It allows you to interact, transact, share and
do a host of things that other media don’t. But the basic, eco-
nomic underpinning of this business is just like that for any
other media.
Two, four large companies—Apple, Amazon, Facebook and
Google—dominate the digital media, globally. This is unlike
other segments where there is more competition and, therefore,
variety available. Digital is, in many ways, actually less utopian
and equal than we would like to think. These four dominate not
just in sheer audience power, but also on revenues. Google has
a vicelike hold on the search market and, therefore, on advertis-
ing. About 18 per cent of all advertising on the internet goes to
Google. As its Android becomes the default operating system on
mobile phones, it is now getting a lion’s share of search revenue
on the mobile too.4 There is nothing wrong or right about this.
Some company may come up with a better search engine and
dominate the market. Another may find a way to get more users
and make more money than Facebook can on social media. But
to romanticise the medium might lead to disappointment. Worse
still, it would mean that as consumers we give up too much pri-
vacy and power to digital platforms which may or may not han-
dle it responsibly.
Three, unless digital can work at bringing adequate returns
for professionally generated content, there will be a long-term
problem. Think about it. Newspapers are losing audiences offline
and gaining them online. Their cost of creating the content that
gets this audience online, remains roughly the same. However
they are not gaining the same revenue online. A newspaper in
the US loses 16 ad dollars for every ad dollar it gains in digital.5
Yet, during an election or a crisis, readers flock to the sites of
known brands such as CNN or BBC. That means they trust
them and want to follow them wherever they are. If it is their
content that is generating traffic and advertising for, say Google,
what will do the trick once all newspapers have died? Or once
all TV companies give up and say, all right, YouTube can do
what it wants. Thankfully some alternative models based on pay,
such as Netflix or Hulu commissioning original programming,
are emerging. Eventually that is what will emerge. The digital
DIGITAL 301
majors will become what the old media majors were: supporters
of original, professionally generated, content.
Four, a good combination of offline and online media could ac-
tually get fantastic results, as is evident in several markets around
the world. See the work being done for Ikea or Coca-Cola both
online and offline. Understanding offline could also help online
get better advertising rates, something the mass media profes-
sionals have mastered. If only the online devotees would get over
their need to snigger at mass media, they could swap so many
nuggets of knowledge with the big boys.
Why are we looking at digital media separately? Television is,
for all practical purposes, digital. In printing almost the entire
backend, up to the time you read the newspaper, is digital. Music
has completely moved into cyberspace. Radio is halfway there
and in films, except for the production process, the distribu-
tion and exhibition is 80 per cent digital. If all media is digitis-
ing, why then do we have a chapter called Digital Media at all?
It is a question that will haunt all of us as we seek conceptual
clarity in a world where the shapes and forms of everything we
know are changing, shifting, morphing so fast, that is impossible
to give them a name. This chapter then is an attempt to create a
structure around all the forms of media emerging as a result of
the affairs and marriages between old and new formats, between
technology and content, between the medium and the message.
It collapses the two chapters on internet and telecom into one
overarching one.
This chapter will deal with the business of media and enter-
tainment in the online world. This is irrespective of the method
of access (Wi Fi, Wi Max, wireline et al) or device (laptop, tab-
let, phone, smartphone or phablet) or content (TV programmes,
music, films, news, advertisements). It does not get into e-
commerce, except if it talks about music or films being sold or
streamed online.
What, then, is digital media? What are its shape, size and
contours in India? Take a look at Table 6.1 It roughly maps
how we consume digital media currently. But that is only half
the story. What do we do in the online world—we watch films,
listen to music, talk to friends, buy something. It is when we
do this that we either spend time, money or both on online
media. And that is how companies make their money. They try
to reach us through advertising on the sites that we go to, or

by offering to sell us something or by informing us about their
products.
This is, as Nikhil Pahwa founder and editor, Medianama.
com, puts it, ‘one of the most exciting junctures in the history
of digital media. There is an unprecedented increase in traffic
numbers and in advertising revenues.’ At a total of 127 million
internet users and 100 million users on other devices India is
now a significant digital media market (see Tables 6.1 and 6.2).6
Just totalling these to 227 million however will not give us the
total audience for digital media, since there is a lot of duplica-
tion between, say, people using their laptops, mobiles or tablets
to access the internet. According to the IAMAI7 about 16 per
cent of the total traffic on the internet came through mobile
phones in 2012–13.8 The advertising spends on reaching out on
digital, across devices or access types, was `21.7 billion in 2012
going by the FICCI-KPMG 2013 numbers. On the other hand,
pay was a bigger revenue source at over `250 billion. However,
a bulk of this came from caller tunes, ringtones and other value
added services sold by telecom companies. About 80 per cent of
this was retained by the telecom companies. The remaining 20
per cent was split between content companies and aggregators
(read ‘The Way the Business Works’). The content company’s
share gets added to its respective industry—music sold digitally
is added to the top line of the music industry. Therefore pay
revenues for digital media are not added to its total numbers.
It makes sense to look at it separately only to understand the
structure of the industry.
The benchmark US market did a massive $36.6 billion in digi-
tal advertising.9 This includes $3.6 billion spent on mobile adver-
tising. There were no credible estimates for the total pay market
for digital media in the US. At over 270 million people online, it
is not the world’s biggest market by volumes, China is. But the
US is by far the world’s largest digital media market in revenue
terms. The Chinese market did an estimated $12 billion in digi-
tal advertising. Globally, digital ad spends were US$88 billion in
2012, going by Zenith Optimedia. There are varying estimates
for the pay market for digital media, none of them very credible.
This is where all the ‘buts’ begin. While digital is a powerful
medium, a lot of its power is as yet untapped because India
DIGITAL 303
is evolving differently. In India, digital is coming into its

own when almost every other media—newspaper, television,
radio—is also booming. This is unlike, say, the US, where first
newspapers took off, then radio, then television and so on. It
gave every media time to evolve. In India, everything from the
mobile phone to the internet and radio, have had little breathing
space to make mistakes and go through their evolution cycles.
This simultaneous boom across media also means that the
competition for capital is intense. Even if you argue that the
quantum of money needed for digital is not on the same scale
as, say, DTH television, the fact remains that the amount is
significant.
The big challenge for digital is not potential. That is evident
and growing. It is mastering the revenue-making ability of news-
papers and television, getting better rates, managing scale, all the
everyday issues of running a media business.

The Issues
The poor power and infrastructure situation in India is a drag
on the growth of digital though the mobile has helped deal
with that to an extent. Then there are bandwidth issues as
broadband penetration takes its time to take off.10 The other
issues are -
Monopolistic Mindsets
There is a monopolistic mindset that has now become part of
the digital ecosystem: be it Google’s monopoly over search,
Facebook’s over social media, or telecom operators with their
hold over Indian consumers. Across the internet and telecom,
dominating platforms11 are taking away large chunks of the
revenue. This doesn’t leave enough in the ecosystem for content
creators and aggregators to survive. Entire categories of content
creators, such as music or newspapers, are struggling. This is
not just because their readers or listeners are moving online,
but because they are not being able to monetise them. It

could be either because their content is being offered free by
aggregators such as Google or because it is being pirated (as in
music) or because advertisers do not consider an online reader
worthy of paying good money for. The value-added-services or
VAS industry in India is a good example. Of the `250 billion in
VAS revenues, just about 5–15 per cent went to companies that
owned copyright over the material such as a song. Anywhere
between 15–20 per cent went to companies such as Hungama,
Indiatimes or OnMobile, which act as the aggregators and/
or technology enablers. The rest, between 60–80 per cent is
retained by the telcos. This is an exact reverse of the revenue
split in most mature mobile markets. In Europe and Japan,
for instance, content companies get a bulk of the revenue. So
aggregators and content companies in India are now finding
ways of selling directly to consumers, through embedded
content on smartphones and tablets or through branded portals
such as Hungama. (See ‘The Rise of the Aggregator’.)
A Fragmented Ecosystem
“Though the leaders in the field are trying to bring some order
to the chaos, the digital media ecosystem is pretty fragmented,”
says Niren Shah, managing director, NVP India. The fund has
investments in several digital media ventures such as Komli
and Quickr. Shah has put his finger on the one big thing that
is continuing to hamper both scale and profitability in this
industry. There are several issues with the ecosystem. Here are
the five major ones –
One, digital media currently gets the lowest realisation for
every 1,000 people it reaches out to. Some part of this is because
digital has spent so much time marketing itself as a transparent
medium that even display advertisers demand results. “A pay
per performance (or cost per action) campaign in most cases
takes the last click as the only success indicator. This attribu-
tion of conversions to the last click is flawed. Advertisers need
to look at the internet beyond just a click,” says Ratish Nair,
co-founder, AdMagnet, an ad network. He adds that, “Almost
all digital properties in India (with the exception of Google)
DIGITAL 305
are struggling to generate revenues, be it portals or niche web-

sites (am not getting onto e-commerce here which could be in
an even worse state). While CPMs may have grown somewhat,
that would be just correction for inflation, so no real growth
has happened.” The other part of the reason ad rates don’t grow
is that digital cannot offer the richness and engagement of TV,
according to some research Nielsen did in the US. Device size
is an issue too. On the mobile, the fastest growing device for
internet access, the rates are five times lower than for a user ac-
cessing it on the laptop.
Two, Nikhil Pahwa, founder and editor, Medianama.com
reckons that digital firms are not spending enough time on
gaining an audience since they are happy with the ad dollars
that Google doles out. Digital companies simply do not focus
on hiring high quality sales people who could evangelise the
whole space. Alok Mittal, managing director, Canaan Partners,
agrees: ‘There is very little thinking on what works on digital
even through the infrastructure and technology exist’, says he.
‘Content is a big issue. A lot of content consumption happens
on non-Indian sites’, says Ratish Nair, co-founder, AdMagnet,
an ad network. This is because there isn’t enough original India-
centric content in English and there is hardly anything in other
Indian languages.
Three, the payment terms for digital media companies are not
cast in stone. They are rarely paid on time or within credit limit
periods. It is normal for credit periods to stretch for 18 months
and more. In many cases the payment never comes and becomes
a bad debt. This is because unlike say IBF or INS, the industry
associations for the television and print businesses, there is no
industry body that stands up for members if advertisers do not
pay on time. ‘No one messes with Google, Yahoo! and Microsoft
and the IAMAI is toothless’, says Pahwa.12
Four, payment gateways on the mobile are an issue. Life is sim-
ple if you are buying something through your telecom operator.
The moment you try to buy something on your own, through
the mobile phone, things get complicated. This, says Pahwa,
is because backend payment gateways on the mobile are very
complicated for Indian companies who have to follow the local
rules. This means logging in with a password, on the mobile, to
do a one-time payment. This has stymied the growth of content
streaming and download services on the mobile and actually

helped propel mobile advertising, says Pahwa.
The fifth and last issue with the ecosystem is that metrics
and analytics that help marketers compare digital media to
print and TV are missing. “Globally consumers are combining
social media to old media like television. But in India there no
way to analyse the effectiveness of advertising across media,”
says Alok Mittal, managing director, Canaan Partners. (See
caselet 6b)
Getting Old and New Media Talking

What adds to these anomalies is the fact the print, TV or other
media companies just haven’t managed to crack digital on their
own. “The content industry and the digital media ecosystem are
still not in a participative mode,” says Neeraj Roy, CEO, Hungama
Digital Media. Television companies still go to YouTube (Goog-
le) and then grumble about the revenue share. Maybe you need
more search engines bidding for content for prices and revenue
shares to go up. To operate in the ecosystem as it exists now, con-
tent creators need to be more proactive. Newspaper publishers
have a ten-year period before digital will truly hit all of them in
India. Yet most haven’t even started looking at it seriously. “Why
can’t every movie that comes out have another form factor called
gaming? We need some re-imagination of what can be done,”
says Roy. If the digital media professionals interacted with print
and TV more closely they could also pick up stuff on how to im-
prove rates, invest in content and so on. There is a lot of room for
cross-media knowledge sharing that will help both to improve
scale, variety and profitability.

Most of the opportunities and growth areas are emerging from
the problems facing digital. For instance, the single biggest
change in digital media is the shift to off-deck services or ones
that bypass platform owners such as the telecom companies or
Google. It is along with the others the single biggest opportunity
to create new media majors who could correct the anomalies in
DIGITAL 307
the digital media ecosystem as it exists today. The other is the

growth of mobile within the whole digital ecosystem.
The Rise of the Aggregator13

Zenga is a mobile TV operator that offers more than 100 chan-
nels such as Aaj Tak, DD News, or Mahua along with a host of
other content. It had in April 2013, about 25 million unique users
a month who consumed 250–300 million video views. Zenga TV
is ad-supported; you don’t need to pay your mobile operator to
use it. According to Shabiir Momin, co-founder of Zenga, the
firm, which was set up in 2009 has had two profitable financial
years 2011–12 and 2012–13. At roughly `1.5 billion in revenue,
it is now generating enough cash to commission its own shows
meant only for the mobile and web. It eventually hopes that a
mainstream broadcaster will buy these shows too.
Zenga is not just a successful mobile TV company. It symbol-
ises the churn in the digital media market with the middlemen
or aggregators now aspiring to become ‘Digital media Brands’ or
‘New Media Companies’, as Neeraj Roy, CEO, Hungama Digital
Media, puts it. Hungama calls itself a publishing, development
and distribution company for digital content. The shift—from
telco-delivered entertainment services to aggregator-brand-
dominated ones—is the single biggest shift in the Indian market
in recent years. This is because it will determine who will be the
gatekeepers to the market for digital media in India. This shift is
happening for four reasons that are critical to any understanding
of the digital media eco-system.
One, competition. India’s rapid mobile growth attracted more
players putting pressure on prices and margins. There are aggre-
gators now for content, technology, content plus technology and
a host of other things, crowding what is essentially a `50 billion
pie, this being the share of content creators plus aggregators.
Two, only about 5–15 per cent goes to companies that own the
copyright over, say, a song or a film clip. Anywhere between 15–20
per cent goes to the aggregators. The rest, between 60–80 per cent,
is retained by telcos. When the aggregator market was not crowded
it did not matter. But over the last five years, well-funded technol-
ogy or content start-ups don’t see the need to take a lower share.
Three, the arrival of smart devices, such as an iPad or an iPhone

has made things easier. Aggregators or content firms can sell apps
or simply embed a service into the device. That means dealing
directly with the device makers, making them and not the telcos
the power centre.
The fourth is complexity. One request to play a song or down-
load one on a device needs a backend that can decode the de-
vice, the song, the operating system and language among many
variables. According to one estimate in 2012, the job of a large
number of Hungama’s 300 engineers was to ensure that its 2.5
million pieces of content works across 2,800 different platforms.
This complexity and the need to service it then demands better
margins which is what aggregators seek by going ‘off deck’ or di-
rect to consumer.
To these four factors, add one more variable. In July 2011 the
TRAI ruled that telcos must have confirmation in writing from a
user before activating any value-added services or VAS services
as ringtones et al are called. Till then they were automatically re-
newing the subscription for data services. This has already led to
a decline in VAS revenues. This decline is now helping standalone
aggregators such as Saavn.com or Hungama.com, reckons Pahwa.
The Hope from Pay Revenues

The rise of the aggregator or the independent digital media brands
dovetails nicely with an international trend that has, in its own
small way, come to India: the growing popularity of pay revenues
in the digital world. About 450 of the 1,380 dailies in the US are
adopting pay plans. Added to their print subscription revenues
and other revenues, these are actually bringing back pay revenues
in the focus for the newspaper industry.14 The New York Times, The
Economist and Atlantic are some of the brands seeing good results
from pay revenues on digital. In music, for the first time since digi-
tal hit the industry in 1999, there has been growth, on the back of
legal digital downloads and streaming. In television there has been
no major movement of audiences to online. The shift to Netflix etc
is a good thing since it is a paid model. Earlier in 2013 Netflix pre-
miered The House of Cards, an original series it commissioned. By
all estimates Netflix, which the movie studios and TV companies
DIGITAL 309
have hated so far, made money on it. Shemaroo, which started as a

video cassette company, now sits on a digital gold mine that it has
just managed to monetise well. It is among the top ten channels on
YouTube besides being on a whole lot of mobile platforms. And the
growth rate of revenues from digital is now faster than non-digital
reckons Hiren Gada, director, Shemaroo Entertainment.
This then behoves well for an industry that is struggling with
the question of how to finance good, professional content. The
rise of pay revenues across different content forms, platforms and
media segments is, to my mind, one of the most positive devel-
opments for the future growth of the digital media business. You
could argue that in the mobile ecosystem almost everything is
pay. But on other devices such as laptops or tablets, where huge
amounts of video, text and other content is being consumed in
much larger quantities, pay is just becoming a popular word. “We
are on the cusp of enablement of the same consumer into a trans-
action economy,” says Neeraj Roy, CEO, Hungama Digital Media.
If even 100 million of the 227 million people on digital in India
spend money on their online digital consumption it could trans-
late into a lot of money simply because the volumes are so huge.
The Growth of Offline Media

While the simultaneous growth of other media has, in many
ways, delayed digital from taking its rightful place, it has also
provided a boost to it. The growth of offline typically leads to a
growth in revenues for digital. R.P. Singh, the former head of Mc-
Cann Erickson’s digital business explains.15The better an offline
campaign in TV or print does, the more it drives people to look
for details online. For example, everytime Nokia’s gross rating
points or the measure of total viewership of its ads increased, the
searches for its phone, online would shoot up, says Singh, who
handled the brand for a bit. This invariably led to an increase in
its sales. This, then, is true for banking, financial services or even
for other consumer durables such as a refrigerator or a car. If an
ad appeals, you look for more information online and finally end
up buying the product. This is one of the reasons that the list of
top advertising categories on the internet now includes FMCG or
fast moving goods, consumer durables and telecom companies.16
The Growth of Video

One of the biggest reasons why digital advertising revenues are
growing is because a lot of people are spending a lot more time
online watching films, TV clips, entire shows, amateur videos
and what not. In the US, 183 million unique viewers spent 1,200
minutes each in March 2013 watching video.17They consumed
over 39 million videos according to comScore. Of these, Google’s
YouTube topped the list for maximum traffic. Vevo, Facebook,
Viacom and Turner were among the other large sites. In July 2012,
there were 44.5 million unique video viewers in India and they
spent 459 minutes watching video online according to comScore
data. According to one statistic India ranks third in the world in
watching videos online through a PC/laptop and fourth in the
world when it comes to watching videos on the phone. This trend
is important because it helps overcome one of the biggest barriers
to digital’s growth in India—literacy and language. Video does to
digital what TV has done in the offline world, helping connect a
whole lot of people online. Usage and therefore traffic goes up.
The legal download market is already helping revive the music
industry as you read in the chapter on music. A similar thing for
TV and films will bring in a nice slice of revenues for content
creators. T-Series, Shemaroo and Rajshri routinely figure in the
list of top ten YouTube channels.
Even within video there are some interesting trends. For in-
stance, soon after it started Zenga got 95 per cent of its traffic
from live television. Now it gets 70–80 per cent from video-on-
demand, which could be TV, user generated content, clips, music
or anything else. This has prompted new models such as Humar-
amovie.com, which showcases fresh films by unknown directors.
These are curated by professional filmmakers such as Anurag
Kashyap and Imtiaz Ali, among others.
The Growth of Social Media

Platforms like Facebook, Twitter and Linkedin have proved great
so far for people to chat, exchange songs, films, pictures or take
part in one another’s lives over great distances. India is now
the third largest on the list of Facebook’s billion plus users. The
DIGITAL 311
growth of social media has three positive impacts on the whole

ecosystem. One, “it drives net usage,” says Ratish Nair, co-founder,
AdMagnet, an ad network. India is already the third largest going
by the number of internet users. This then pushes platforms and
content creators to experiment more which, in turn, increases
usage and so on it goes. Two, social media provides media and
entertainment with a great platform to promote its products and
services. Three, Facebook had 78 million users in India in the first
quarter of 2013.18Eventually these kind of high levels of traffic and
engagement could be leveraged into, “transaction,” thinks Neeraj
Roy, CEO, Hungama, Digital Media. He points to Tata DoCoMo
which has over 13 million fans. So the next logical step would be
to monetise this base. Some of the stuff that marketers in the US
are doing provides interesting clues. See Caselet 6b.
The Growth of Devices

This is stating the obvious. But it is the growth of all kinds of
devices from basic mobiles to smartphones to tablets and laptops
that has led to the massive rise in consumption of content on
digital. Apart from more people coming on board, it also helps
create alternative revenue streams. For example, apps are emerg-
ing as a potentially lucrative revenue stream for print, thanks to
tablets. The music industry has revived in part because smart-
phones and, therefore, streaming services have taken off.
The Past
The Internet
The ‘Internet’ is a global group of connected networks that allows
people to access information and services. It includes the World
Wide Web, electronic mail (e-mail) file transfer protocol (FTP),
Internet relay chat (IRC) and USENET (Unix User Network,
news service).15
Today, the Internet is a network of millions of computers allow-
ing constant communication throughout the world. It is a world-
wide mechanism for information dissemination, collaboration
and interaction between individuals through their computers ir-

respective of their geographic location. It works by taking data,
breaking it into separate parts called packets and then sending
them along available routes to a destination computer. The pack-
et switched network uses available wire space for only fragments
of a second as it transfers a digital message in one direction. To
connect to the Internet, one has to subscribe to the services of
ISPs. These could be a plain ISP, a telecom or a cable company
depending on the structure of the market.
Four computers located each at the University of California at
Los Angeles, the University of California at Santa Barbara, the
University of Utah and the Stanford Research Institute, were part
of the early beginnings of the Internet. The work was initiated and
funded by the U.S. Department of Defense through the Advanced
Research Project Agency (ARPA). This network was designed to
be a centralised system, which could divert communications in
the event of an attack on an individual network. It was intended
as a military network of 40 computers connected by a web of links
and lines. The ideas that created this network, which later became
the Internet, were floating around long before that.
In August 1962, J.C.R. Licklider of the Massachusetts Institute of
Technology (MIT) first discussed a ‘Galactic Network’, or a globally
interconnected set of computers to access data and programmes
from any site. Licklider was the first head of the computer research
programme at Defense Advanced Research Projects Agency
(DARPA) starting October 1962 (Leiner et al.).19 There he con-
vinced his successors, which included MIT researcher Lawrence
G. Roberts, of the importance of this networking concept. Leonard
Kleinrock at MIT published the first paper on packet switching
theory in 1961 and the first book in 1964. Kleinrock too talked
to Roberts about how feasible it was to use information packets,
not circuits. That became one step along the path toward computer
networking. The second was to make computers talk to one anoth-
er. By August 1968, Roberts and the DARPA-funded community
had refined the overall structure and specifications. By the end of
1969, four host computers were connected together into the initial
ARPANET; the Internet was off the ground.
It was based on the idea that there would be multiple inde-
pendent networks of different designs with the ARPANET as the
pioneering packet switching network. Later, others like packet
DIGITAL 313
satellite networks or packet radio networks could join in. Trans-

mission Control Protocol (TCP) or IP was adopted as a defence
standard in 1980. By 1983, ARPANET was being used by a sig-
nificant number of defence, R&D and operational organisations.
By 1985, both the Internet and e-mail were being used across
several communities, often with different systems.
Englishman Tim Berners-Lee introduced the World Wide Web
in 1991. In 1993 the first web-browser, Mosaic, was developed at
the US-based National Center for Supercomputer Applications
(NCSA).20 The web-browser can be understood as a graphical
user interface to the Internet. It is that part of the Internet that
most users see and use—Internet Explorer and Mozilla Firefox
and now Chrome are the common ones. It has led to tremendous
growth both in terms of the size as well as the use of the Internet.
On 24 October 1995, the Federal Networking Council passed
a resolution defining the term ‘Internet’. This definition was
developed in consultation with members of the Internet and IPR
communities.21
India Goes Online

It was around this time that India discovered the Internet. In
1995, Internet access in India was restricted to a few major cities
and everything was in the hands of the government. The (then)
state-owned VSNL, which was responsible for providing Internet
services, did so with erratic connectivity and very little band-
width in a market where phone lines were in perpetual short-
age.22 It was normal for users to be cut off while surfing the net.
The rates for this level of service were among the highest in the
world at that time. Indian users paid approximately US$ 2 per
hour and leased lines were available at over US$ 2,000 per month
for a 64 kpbs line. Only a few companies could afford to have
leased lines. As a result, by the end of 1998, there were barely
150,000 Internet connections in India.
None of this dampened the enthusiasm of dozens of entre-
preneurs who jumped into the fray. Just as with cable TV, these
entrepreneurs led India’s first steps into this world and its subse-
quent growth. There were people like Ajit Balakrishnan (Rediff.
com), Rajesh Jain (IndiaWorld.com) and Haresh Tibrewala and
Sanjay Mehta (Homeindia.com) who gave in to the lure of a net-

worked world among others.23
The Boom and Bust Years

What made things easier was the availability of money to set up
Internet businesses. Many foreign venture capital firms had set
up shop in India. India’s software successes made them think that
the Internet would give them similar returns. By 2000 positive
investor sentiment about the net was fuelling the growth of all
kinds of websites—on marriage, games, gossip, work, cooking,
working women and so on.24
A lot of the capital coming in, which fuelled these rising sala-
ries and overheads, was based on dodgy valuations since there
were no profits or revenues that could be used as a basis. Any-
thing from hits to pages was used to estimate the popularity of
a website and value it. Between 1999–2000, more than 100 dot-
com valuations happened according to one estimate. The media,
including business magazines, joined enthusiastically in cheering
on what looked like the birth of a medium.
Many companies got in because of the fear of being left behind.
It was clear in several cases that they either hadn’t understood the
medium (fair enough, considering it was new) or they had not
thought through what they wanted to do with it. This is true not
only for Indian companies but even for American corporations.
Walt Disney spent millions of dollars on Go.com, which did not,
well, go anywhere. News Corporation wrote off more than US$
300 million worth of investments that it had made on Internet
businesses during this period.
Everybody got a little carried away and later, because they felt
silly, many dismissed the medium. The ‘dot-com crash’ as it has
now been branded, happened over 2000–01. It was about bloated
valuations and share prices of Internet companies finally falling to
reflect the companies—many non-revenue generating, non-profit
making, non-businesses that had hitched a ride on the back of in-
vestors who were supposed to know better. But the fact is that the
investors, many of them looking at the Internet at the same time as
the entrepreneurs they were funding, were equally clueless.
DIGITAL 315
There was no ‘big’ crash in India, but it affected the market.

The venture capital sentiment turned against Internet companies
and finally the flow of capital dried up. Dozens and dozens of web
businesses disappeared overnight or ran out of funds. But the ones
that survived did so either because they were solid businesses to
start with or because they changed their business models.
Telecom
Telecommunications is the process of conveying information
with the use of electrical energy. It evolved out of an earlier
system involving optical energy. Until less than 250 years ago, the
transmission of information was limited in reach by the speed at
which it could be conveyed and the distances it could cover. The first
primitive communications system based on an electrical technology
was invented in 1747 in England. That is when William Watson
demonstrated electrical transmission using an electrostatic source.
George Lesage showed a primitive telegraph in Switzerland in 1774,
but it was not until the early part of the 19th century that the first
practical systems began to emerge to meet the needs of commerce
and industry for more advanced forms of communication.
The modern age of telecom began in 1839 when Samuel Morse
developed an effective system for coding signals and completed
the electric telegraph system from Baltimore to Washington DC.
Guglielmo Marconi’s transmission of signals by radio demon-
strated the potential of wireless technologies and since then the
basic technologies on which the early systems were built have
been extended and improved to create the worldwide telecom
network.25
Telephony Comes to India

The first telegraph network was set up in India in 1856.26 Its initial
use was during the First War of Independence the following year.
For many years, therefore, the development of telecom was driven
by military and governmental concerns, rather than by consumer
issues or commercial factors. Originally, telecom was part of the
Post and Telegraph (P&T) ministry. Telegraph lines existed till the
1950s, but gradually the telegraph came to be abandoned and tel-

egrams were transmitted by telephones and tele-printers.
The Ministry ran two businesses, P&T and telephones. The
postal service was much more widely used than telephones. Al-
though the telephone service was highly profitable, it was used to
cross-subsidise postal services. That is why very little of the mon-
ey that telephones earned went into expansion and consequently
there was a long waiting list for telephones. These shortages have
marked Indian telecom history all along.
Liberalisation Begins
This came with the prime ministership of Rajiv Gandhi in 1984.
Sam Pitroda, a telecom engineer who had returned from the USA,
became his advisor. Pitroda set up a Centre for Development of
Telematics (C-DOT), a research and development (R&D) or-
ganisation to develop electronic switches. In January 1985, two
separate departments were created for Posts and Telecommuni-
cations. This ended telecom’s cross-subsidy of postal services.
In 1986, a new ministry of communications was created. In
the same year, two businesses were separated from the ministry.
MTNL was set up to manage telecom in Bombay (now Mumbai)
and Delhi, and VSNL to run international services.27 However,
the rest of the telephones remained with the ministry; the service
was run by the Department of Telecom (DoT). Paradoxically, it
remained in charge of the regulatory role in telecom. So, a Tel-
ecom Commission was created in 1989 to formulate policy, regu-
late implementation and also prepare the budget for DoT.
In January 1992, DoT invited bids for mobile services in the
four metros. In May 1994, the government opened local basic
and value-added telecom services to competition. Mobile services
were introduced on a commercial basis in November 1994. The
first mobile telephony service in the metros started in August 1995.
The Mess Begins

And it is from here that the regulatory mess, which was to mar
the growth of telephony in India, began. For perspective, contrast
this with private television broadcasting where no regulation
DIGITAL 317
existed for over 10 years after cable TV took off in India in the
mid-1980s. The first law governing cable came in 1995 long af-
ter consumers had tasted private fare. There was no licensing in-
volved to start with (refer to Chapter 2—Television). There was
only one state-owned broadcaster as a fairly passive, rather inef-
fectual competitor.28 A few months after the arrival of satellite tel-
evision in India, by the time the first Hindi satellite channel was
launched in 1992, it was evident that private broadcasters could
offer much better variety. Now add the fact that a private cable
network, owned by thousands of entrepreneurs, was already in
place. Most new channels just rode on it by selling their signals
to these operators.
In case of telecom, the onus of service was put on private op-
erators, but they were forced to use the network of the incumbent
and price their services in line with the incumbent.
DoT did everything to ensure that private telephone opera-
tors could not make money. The wrangles over subsidies, access-
deficit charges, interconnect-rates and calling party pays (CPP)
standards, are well documented. Frankly, they are also tedious
to read. Unlike broadcasting, if you read the first 10 years of the
history of Indian telecom it does not seem as if there was light
at the end of the tunnel. According to Dr Desai’s study29, most
private operators ended up making losses not only because they
had paid high licence fees and interconnection and other charges
to DoT, but also because the business was unviable. In anticipa-
tion of the launch of private services, DoT started meeting the
pending demand. As a result, the projections made by private
operators went awry.
The Birth of the New Telecom Policy

By 1998, eight mobile service operators and all the landline
operators were in default of their licence fees. An ICICI study
of 22 mobile service operators found that only one, Bharti Tele-
Ventures, had made a small profit of `25 million in 1997–98.
Seventeen per cent of the subscribers had not used their phone at
all, and 37 per cent had bills of under `500 per month. Another
TRAI study in 1999 found the same problem of low user off-take,
low ARPU continuing. The recommendations of these studies
generated debate in the media and legal wrangling followed.

Finally, the Group on Telecom, an inter-ministerial committee,
resolved the issue.
The result was the New Telecom Policy of 1999. This brought
about four major changes.
One, all circle operators were required to pay 2.8 to 2.9 years’
licence fee at the old rates before migrating to a revenue-sharing
formula.
Two, DoT and MTNL were allowed to enter the mobile phone
business. Most mobile operators were already offering services
below the `8.40 per minute maximum set by DoT. With two
more players in the fray, a price war was imminent.
Three, private landline operators were allowed to give CDMA
mobile connections. So far cellphone technology in India had
been based on GSM.30 Finally, it was no longer necessary for
private operators to route intra-circle calls through DoT and
MTNL. They could build their own networks. The government
monopoly in domestic long-distance traffic was abolished in
April 2001, and in international traffic in April 2002. By all ac-
counts, it looked like telecom was finally getting on with it after
shedding a decade of nitpicking, losses and regulatory hassles.
Landline companies began using CDMA wireless connections
to push costs down and mobile phone operators were free of the
licence fee. As call charges fell, the market expanded. This was
when TRAI began experimenting with tariff regulation. In 1996,
it cost `16.80 per minute to make a phone call. Even this fell by
half in 2000, one year after the New Telecom Policy.
The Boom Years

The total cost of ownership, that is the cost of the phone as well
as the airtime costs went down as a result of the New Telecom
Policy of 1999. By 2002, the government brought down the du-
ties on handsets from 72.5 per cent to about 14 per cent. These
came down further to 4 per cent, allowing hardware companies
like Nokia to offer mobile phones for as little as `5,000. Then came
the Reliance Infocomm (now Reliance Communications) mo-
bile service, in December 2002, at low prices. The market never
DIGITAL 319
looked back after. The effective rate of making a mobile phone

call dropped to under `2 per minute and the number of users
kept jumping.

The Value Chain
There are two ecosystems in play in digital, the one on the mobile
and the other on the internet. ‘On the mobile pay models are
evolved, but on the internet largely everything is ad supported’,
points out Hiren Gada, director, Shemaroo, Entertainment. If
you combined both into the digital media ecosystem, there are
three key players in the digital media play:
Platform Owners
These could be Airtel or Google or Vodafone or Yahoo! among
others. These are the big stations or stops we go to when we are
looking for something in the online world. Some of them depend
on advertising, others on pay revenues, some on a mix of both.
All of them offer a basic service—search (Google), voice (Airtel,
Vodafone)—and then top it with other services such as songs,
email, and so on. The platform owner keeps a bulk of the adver-
tising or pay revenues that is made through content put up on
his platform. For instance, telecom operators keep about 60–80
per cent of the money they bill you for a song. The remaining is
split between aggregators and content creators. This, however, is
not the norm. YouTube, for instance, shares roughly half of its ad
revenues with content owners.
Aggregators
Companies such as OnMobile or Hungama act as a link between
platforms and content companies wanting to use digital to gener-
ate revenues. Hungama aggregates 2.5 million pieces of content
(songs, films, clips, wallpapers etc) across 400 different content

companies. It offers this in 47 markets through partnerships with
mobile operators or ISPs (Internet service providers) in those
markets.31 Similarly, there are aggregators for technology, back-
end services or payment systems. Essentially, since the value per
transaction is low (say, `5–10), the volume is high, it makes sense
for specialists to take over these services. This helps platform
owners to keep costs and, therefore, prices low. Content aggrega-
tors/technology enablers get anywhere between 15–20 per cent
of the revenue that mobile operators collect from subscribers.
The revenue share content owners/aggregators from non-telco
owned platforms are substantially better.
Content Creators
These could be music, film, newspaper companies among other
content creators who sell the digital rights to their content to the
aggregators or technology enablers and get a cut on revenues.
Some content companies also prefer to have their own short code
and sell directly, with the aggregators remaining at the backend.
Equally TV companies could be licensing the rights of shows
they own to YouTube or someone else for a share in advertising
revenues. Typically, content companies get 5–40 per cent of the
retail value of the content sold in digital. The advertising share
they get is completely dependent on the deal with the aggregator
or the platform owner.
The Clusters
There are various ways to look at digital media. But since ad-
vertising is such a big revenue stream here is a look at it from a
marketer’s perspective. There are three distinct clusters in which
digital falls as far as the advertiser/marketer is concerned –
Owned Digital Media

These are websites, microsites, apps, widgets or any other pub-
lic forms of data that a brand, say Coca-Cola, owns. A Coca-
Cola will however not want outside advertising on its site. All
DIGITAL 321
it wants is for its users to be engaged with its site or download

its app.
Paid Digital Media

This is media that a brand pays for. The platforms, content crea-
tors, aggregators or anyone else could own it. Marketers use it for
advertising which falls roughly in the following categories:
Search This is the money digital media companies make

when advertisers pay to list and/or link their company
site domain name to a specific search word or phrase (in-
cludes paid search revenues). For instance, if you ran a
search for ‘Hotels’ in New Delhi, the Taj Mansingh could
come up either on the right hand side of the search results
or within the search results. The right hand side results
are the sponsored links or the stuff advertisers pay for.
The results on the left hand side are the ones from organic
search. This cannot be sponsored but the results can be
improved through search engine optimisation. To do this
its website may need to change or modify its program-
ming code. Various online agencies specialise in helping
companies come up on tops in the search results. This is
called being part of the natural search.
Paid or not, search is the biggest and fastest growing
part of the digital ad pie. In 2012, paid search was 47 per
cent of all advertising money spent online in the US. In
India, it is about 38 per cent of all the ad money spent
online (including mobile). About 85 per cent of the mon-
ey spent on search in 2012 was spent on search engine
marketing or buying adwords that would ensure that your
brand name cropped up on the right hand side of a rel-
evant search result. The remaining 15 per cent was spent
on search engine optimisation.
Classified advertising This is exactly the same form of ad-
vertising that you see in newspapers or magazines. The only
difference online is that you can respond to the classified ad
immediately. There are all sorts of specialised classified sites
in India for jobs (Naukri.com), finding homes (99acres.com
or magicbricks.com), finding a partner (shaadi.com) and
so on. These sites make money when advertisers buy space

on the site to place their ads and also through search adver-
tising. For instance, if you are looking for a job in a private
bank, chances are that while running through Naukri.com
you will see display ads of banks looking for people.
Display advertising This works just as in other media: an
advertiser pays to have his ad displayed on a website or on
the phone screen of a user. Usually the rates would vary
depending on what part of the website is used, the size,
graphics, frequency and other variables. There are ads with
video, without video, with simple flash or with heavy or
light pictures. Typically, the home page, just like the cover
page of a magazine, is more expensive. The ads on the other
parts of a website are called ‘Run of site’ ads. Mobile ads
typically are a fifth as expensive as the online ones.
Social media advertising This refers to any type of text,
display, stamp ads on social media sites such as Facebook
or Twitter.
Email advertising This means sending an advertisement
on the mail to potential or current consumers.
Mobile advertising This works just as in other digital
media: there are search, banner, display or classified ads
on the mobile screen. It could also be games created by
advertisers. There is also in-app advertising which is be-
coming very popular.
Earned Digital Media

This is any media that the advertiser does not pay for—by cre-
ating a website or by placing an ad. Typically this term applies
to social media and would include comments, tweets, shares or
likes. Facebook owns the eponymous networking site, but the
comments by users about brands on that site are not something
that a marketer can buy.
The Revenue Streams

The main revenue streams for companies in digital are:
DIGITAL 323
Access
This is the monthly charge that users pay to access the internet or
have a telephone connection. Access charges could vary between
`200 to `1,000 per month depending on the package bought, the
hours of usage and the bandwidth used.
Subscription
This could come from fee-based services such as a streaming mu-
sic or film service.
Advertising
There are different ways in which a website could earn advertis-
ing revenues depending on the different forms of advertising
mentioned above. The ad space on a mobile screen, iPad or on
a website can be bought directly from a platform owner, say
Yahoo!. It could be bought through representatives such as Ai-
dem or Publicitas which aggregate some of the larger sites. Or it
could be bought from an ad network. This is an aggregator who
puts together hundreds and thousands of sites together and
actually plans your digital media for you. There are several ad
networks in India such as Komli and Tribal Fusion. The differ-
ence between ad networks such as Komli and independent rep-
resentative such as Aidem is that Komli will not tell you where
the ad will run. As an advertiser of, say financial services, you
could choose a genre of sites that you want to be seen across.
Then the Komli software will play out the ad across relevant
sites in the contracted period.
The Costs
The main elements of cost are technology, people and marketing.
The variations depend on the kind of business, scale of operation,
and so on. For instance, a B2B content-driven portal, say afaqs!,
will spend a large amount on people costs in editorial or content
while the big expense of Naukri, which is into classifieds, would
the cost of its sales force.
The Metrics
The metrics you look at depends to a great extent on your per-
spective: are you a platform owner, an advertiser, a content crea-
tor or an aggregator. But largely they will be a combination of
traffic and pricing/revenue metrics.
The Traffic Metrics

In India media buyers and advertisers go mostly by comScore
data to gauge which websites to include in their media plan. Hav-
ing done that, they measure performance of the site concerned by
one among three major options: CPM when the advertiser buys
‘impressions’; CPC when the buyers wants to pay based on the
number of people who ‘click’ on an ad or banner; or CPA when
the advertiser wants to pay on the ‘acquisition’ of a customer.
Whatever route chosen, performance is always measured closely.
Some of the common metrics and terms, which may or may
not be defined by IAB, but are used while doing business on the
net are:32
Page
A page is the starting point of every measurement on digital. It is
a document with a specific URL. It is made up of a set of associ-
ated files. A page may contain text, images, and other elements.
It may be static or dynamically generated. It may be made up of
multiple frames or screens, but should contain a designated pri-
mary object which, when loaded, is counted as the entire page.
Hits
When a user accesses a website, the computer sends a request to
the site’s server to begin downloading a page. Each element of a
requested page (including graphics, text and interactive items)
is recorded by the site’s server as a ‘hit’. If a user accesses a page
containing two graphics, those hits will be recorded once for the
page and once for each graphic. That means that everything on
DIGITAL 325
a web page—a picture, a graphic, a text box, all of which are dif-
ferent files—will be counted as a hit, even if just one person has
been to that page. While hits were the first metric used when the
net took off, they were soon discarded. Since page design and
visit patterns vary from site to site, the number of hits bears no
relationship to the number of pages downloaded. Hits, now, are
acknowledged as a bad measure of traffic. They are used by the
websites only to check the workloads on their servers.
Page Impressions
This refers to the number of times a page was requested by a user.
‘Page views’ are used to when a web page is actually seen by the
user. This is not measurable today; the best approximation is
provided by page displays. There are several questions even on
page display or impression. Does the server record it when a user
downloads a page or when it is requested? It could also be when
a tracking pixel, a tiny file placed on a page for counting page
views, finally reaches the surfer’s screen. If you ask for a page, but
lose patience if it is taking time to download, chances are that it
will be recorded as a page view though you left the site long back.
Click
The pricing of digital advertising could vary across devices and
access formats. It could vary by category of advertisers, by medi-
um, device, formats and a whole lot of things. But the fundamen-
tal units used are pages and clicks. There are three types of clicks:
click-throughs, in-unit clicks and mouseovers. These include fol-
lowing a hyperlink within an advertisement or editorial content
to another website or another page or frame within the site.
Reach
The IAB (Internet Advertising Bureau) defines reach as unique
users that visited a site over the course of the reporting period. It
is also called unduplicated audience. ‘Unique users’ could also re-
fer to the total number of people who are ‘served’ an ad. ‘Unique
users’ are unique individuals or browsers that have either ac-

cessed a site or have been served unique content and/or ads such
as e-mail, newsletters, interstitials and pop-under ads. User regis-
tration or cookies can identify unique users. A cookie is a file on
the user’s browser that uniquely identifies him. A browser such
as Chrome, Internet Explorer or Mozilla Firefox is used to surf.
There are two types of cookies: session cookies and persistent
cookies. Session cookies are temporary and are erased when the
browser exits. Persistent cookies remain on the user’s hard drive
until he erases them or they expire.
Churn
This is the number of people who give up on a service or fall
out of the subscriber/user list. This could happen for a variety of
reasons. In the course of market expansion, a company may have
picked up subscribers who can barely afford the service and have
subsequently dropped out. On the other hand, poor quality of
service may be a reason for subscribers opting out. Whatever the
cause, digital media brands keep track of churn rates.
Likes, Fans and so on

With social media there is a rise in metrics like cost per like and
cost per fan and maybe some more “irrelevant metrics,” says
Ratish Nair, co-founder, AdMagnet, an ad network. He reckons,
however, that when it comes to social media, advertisers are in-
creasingly looking at metrics which could measure engagement,
brand awareness and so on. “These metrics (fans, likes) have in-
creased in popularity because of the way users interact with so-
cial media,” says Nair.
The Revenue Metrics
CPM/CPL/CPC and Others
The pricing of digital advertising could vary across devices and

access formats. It could vary by category of advertisers, their ad-
vertising objective, product category and son. It could be based
DIGITAL 327
on performance or on traffic or other things. It operates very

much like mainline advertising. The only difference is that the
permutations and combination are many. The interactivity of the
medium and its inherent transparency lends itself to far more
number crunching.
There is cost-per-action which is based on a surfer taking
some defined action in response to an ad. This could mean
buying something or signing up for a service or just clicking
on an ad, among other things. Alternatively, ad rates could
be based on cost-per-click, or the number of clicks received.
Then there is cost per lead, cost per video viewed33, cost per
download. About twelve years ago, cost-per-click, or cost per
lead were the rage says R.P Singh, the former head of McCann
Erickson’s digital business. Now many advertisers prefer CPM
because they have become chary of ‘click fraud’. 34This hap-
pened because the digital media owners would get random
people to mass click on a brand’s advert since they were being
paid on a per click or per lead basis. CPM or Cost per Mille
(cost per thousand) also makes it easier to compare the cost of
digital with other media. However, performance based metrics
such as cost-per-click or lead, work for financial services or
banking, categories where a response is critical. They are not
always a good measure for pricing advertising whose aim is to
build awareness.
ARPU or Average Revenues Per User

This is, by far, the most important metric from a pay revenue
perspective. A streaming or download service typically will track
this closely. Just like telecom companies track it for revenues on
voice and non-voice services.
The Regulations35
Digital Media encompasses the dissemination and consump-
tion of information through electronic means, largely consisting
of online or internet based consumption. Such dissemination of
information may be in the form of user generated content (such
as content available on youtube.com or social networking sites)
or of professional or industry produced content (such as content

available on television channel streams or news websites or web
services like Netflix.com).
The legal regulation of digital media occurs at two distinct lev-
els, the content side and the platform side. The content side is
concerned with the matter being disseminated, while the plat-
form side is concerned with the means through which it is being
disseminated. The content side regulation in the broader context
relies on passive and reactive forms of regulation, such as tort
or civil proceedings (through actions such as privacy, defama-
tion, nuisance etc). In instances of grave violations these could
go to criminal proceedings. Such passive regulation encourages
content producers and distributors to self-regulate. The regula-
tory scheme also relies on industry specific regulation of a more
active nature, which is relevant to particular professions or media
formats (such as the Norms for Journalistic Conduct issued by
the Press Council of India, or the Programme and Advertisement
Codes issued by the Ministry of Information and Broadcasting).
The content side of regulation has been addressed in the vari-
ous parts of the book that are concerned with the media format in
question, for example, the Programme and Advertisement Codes
are summarised in the Television chapter and the Norms for Jour-
nalistic Conduct are dealt with in the Print Media chapter.
This section is concerned with the platform side of regulation.
In the broader context, online media is governed by the Informa-
tion Technology Act, 2000. It is supplemented with certain plat-
form specific forms of regulation in the narrower context.
The Information Technology Act 2000

The Information Technology Act, 2000 is an umbrella legislation
that is designed to cover all forms of activity that relies on elec-
tronic media. Thus, it accords recognition to documents executed
in electronic form, regulates the operation of digital signatures,
sets out rules concerning take-downs of infringing or defamato-
ry content, and security of certain forms of personal information.
It should also be noted that the Information Technology Act
accords specific exemptions from liability and protections to en-
tities involved in facilitating the operation of the internet, that is
DIGITAL 329
organisations providing the back-bone infrastructure of the in-

ternet (such as websites, hosting servers, network service provid-
ers, internet service providers etc.)36. This exemption from any
and all liability is accorded to intermediaries in case they act as
mere conduits of information and are diligent in acting in case
of receipt of any complaints concerning infringement of rights37.
In relation to the operation of this exemption, the Department
of Electronics and Information Technology has issued Informa-
tion Technology (Intermediaries guidelines) Rules, 2011 (“In-
termediaries Rules”). These require internet intermediaries to
conduct their activities with diligence and ensure as reasonably
possible that no harmful or unlawful content is displayed or is
accessible through their systems or networks. Furthermore, they
prescribe a notice and takedown measure similar to that under
the Digital Millennium Copyright Act of the United States, with
the requirement that on notice of any infringing content, the in-
termediary must take down such content within 36 hours of no-
tification to avail of the exemption from liability provided under
Section 79 of the Information Technology Act, 2000.
The IT Act Amendments (2008)

The Information Technology Act, 2000 was amended in 2008 to
introduce a provision concerned with data privacy and security.
This exempts an entity from liability for any losses occasioned
by a loss of sensitive personal data in case such an entity dem-
onstrates that it implemented reasonable security policies and
procedures. In relation to this provision, the Department of Elec-
tronics and Information Technology has issued the Information
Technology (Reasonable security practices and procedures and
sensitive personal data or information) Rules, 2011 (“Privacy
Rules”).
The Privacy Rules define sensitive personal information and
data to include personal information (concerning a natural per-
son) such as password, financial information (bank account,
credit card etc), health information, sexual orientation, medical
history and biometric information, and require certain consent
based to be followed for the collection, use or transfer of such
information. These rules require the implementation of security
measures commensurate to the information being protected.

They recommend the implementation certain security standards.
Furthermore, in relation to the content side, the Information
Technology Act, 2000 has been amended in 2008. It now incor-
porates a general limitation to prevent the use of electronic com-
munication devices to send grossly offensive or menacing infor-
mation, or any information that is calculated to cause annoyance,
inconvenience or insult. This provision accords criminal liability
with an imprisonment term of a maximum of 3 years and/or a
fine. As it is fairly broad-based, it has raised concerns of excessive
or abusive use. In response to certain excessive and disproportion-
ate instances of the exercise of this provision, the Department of
Electronics and Information Technology has issued an advisory
cautioning against the wanton use of the provision. The advisory
requires that any enforcement of the provision must be sanctioned
by an officer at or above the rank of the Inspector General of
Policy (in cities) or Deputy Commissioner of Police or the Su-
perintendent of Policy (in districts). This provision has also been
challenged on the grounds of violation of constitutionally guar-
anteed fundamental rights (such as the liberties of speech and
expression) before the Supreme Court of India38. The matter is
currently pending before the Supreme Court.
Platform Specific Regulation

The various elements and platforms employed for accessing digi-
tal media, such as internet service providers and telecommunica-
tion services providers, are separately regulated. The Department
of Telecommunications (‘DOT’) and the Telecom Regulatory
Authority of India (‘TRAI’) are the two bodies which do it.39 The
policy framework supporting them consists of :
The National telecom Policy (2012)

The National Telecom Policy 2012 replaces the New Telecom
Policy of 1999. Its key provisions and initiatives are:
• Incentives for expansion of rural broadband networks

and provision of affordable broadband services in rural
areas.
DIGITAL 331
• Introduction of secure transactional services through

mobile devices.
• Incentives and measures to promote the research and
development and manufacture of telecom terminals and
network equipment in India.
• Introduction of mobile virtual network operations, which
are entities that lease mobile bandwidth or spectrum
from spectrum licensees and offer mobile services on
such leased bandwidth.
• Simplify licensing framework, and introduce a single li-
cence for the entire country.
• Work towards free roaming and full mobile number port-
ability across the country.
• Further liberalisation of VoIP (Internet Telephony) ser-
vices, by enabling recognition and interconnection with
telecommunication services.
• Promote the growth of internet telephony in India.
With respect to Internet Telephony in particular, the DOT has

suggested the creation of a single unified internet service frame-
work to provide VoIP services in India.40 This framework will
help facilitate the implementation of registration and intercep-
tion processes for VoIP communication to respond to security
concerns.41
The DoT has adopted a Strategic Plan for the expansion of tel-
ecommunication services in India during the period 2011–2015.
The key strategies and measures devised for this purpose by the
strategic plan are:
• Review spectrum management and governance, particu-

larly to move away from command and control structures
of spectrum management and enable allotment of licence
free spectrum for low power devices or applications;
• Create incentives for efficient use of spectrum;
• Delink licences from spectrum allocation;
• Consider technologically neutral licensing and regulation;
• Ensure efficient allocation of resources and management
of infrastructure to enable expansion of broadband net-
work;
• Assist and fund broadband service provision (particularly
mobile broadband) in rural areas;
• Incentivise the provision of rural communication services

and use of non-conventional energy sources for infra-
structure;
• Support and strengthen public sector units in the telecom
sector, particularly where such units undertake loss-making
socially desirable activities (such as ensuring universal
connectivity).
• Incentivise and promote research and development in the
manufacture of telecommunication equipment.
The strategic plan also contains an implementation plan for

each of the key strategies and measures, and accords weight
to each. For example the policy on delinking of spectrum and
service provider licences is listed as high and is proposed to be
implemented in the financial year 2013.
Licensing
The DOT also uses licensing agreements to enable telecom ser-
vice providers to access and utilise radio spectrum for the pur-
pose of providing telecommunication services in India. The
DOT issues licences (and related guidelines) to service providers
in the form of Unified Access Service Licenses (‘UAS Licenses’).
This enables licensees to choose the appropriate technology to
provide any breadth of services, as may be possible within the
limits of the spectrum range allocated, such as voice telephony,
data transmission, IPTV etc. The UAS Licenses represents an
upgradation from the earlier forms of licencing, such as Cellular
Mobile Telephone Service licenses, which restricted the licensee
to one or two activities in relation to the allocated spectrum. The
DOT has provided licensees holding such licences with schemes
to migrate to the UAS Licenses.
The key terms of the licensing arrangements of the DOT con-
cern ensuring
• the service provision is restricted to licenced areas

• spectrum is not concentrated within the hands of a few
business groups
• promoters and key shareholders of the licensee do not
transfer their interest in the licensee for a particular period
DIGITAL 333
• allocated spectrum is efficiently and effectively utilised

• entities do not engage in any uncompetitive or unproduc-
tive activities, such as spectrum hoarding.
The DOT similarly regulates internet service providers

through the issue of internet service provider licences and guide-
lines related to such licences. The key terms of the licences seek
to ensure that:
• service provision is limited to the licence service area

• the nature and forms of service that may be provided
• the manner of connecting with other intermediaries and
internet gateways
• customer-centric protection such as provisions to ensure
non-discriminatory service provision and charges.
With respect to the licence fee payable, the DOT charges li-
censees an initial fee for the grant of the licence or spectrum, and
thereafter charges a percentage of the Adjusted Gross Revenue of
the service provider as the licensee fee in each year. The percent-
age varies with the service area.
TRAI Regulations
The ambit of TRAI regulatory and supervisory authority extends
to the operations of telecom service providers as well as internet
service providers. In this respect, TRAI has published and adopt-
ed regulations concerned with the minimum quality of service to
be provided. These parameters deal with unsolicited commercial
communications, ensuring effective mobile number portability,
facilitation and terms of interconnection agreements between
service providers and tariff orders, among others.
Foreign Investment
The limits on foreign investment are specified in the Consoli-
dated FDI Policy, circular 1 of 2013 effective April 5, 2013. This
policy circular sets the FDI limit for telecom service providers42
at 74 per cent. This limit includes—foreign direct investment,
foreign institutional investment, investment by non-resident

Indians, investment by foreign entities through foreign currency
convertible bonds, American depository receipts, global deposi-
tory receipts or convertible preference shares.
Of this limit, 49 per cent is permissible through the automatic
route, and the remaining is subject to the approval of the FIPB
or the Foreign Investment Promotion Board. Furthermore, the
FDI policy circular adds certain limitations and conditions to the
service provider. These are:
• the chief officer in charge of technical network operations

and the chief security officer must be resident Indians
• the majority of the board of directors of the service pro-
vider must be Indian citizens.
Similarly, Internet Service Providers (whether with or
without gateways) have an FDI limit of 74 per cent (Auto-
matic upto 49 per cent and subject to the FIPB’s approval
thereafter). Infrastructure providers, electronic mail and
voice mail providers have a limit of100 per cent (Auto-
matic upto 49 per cent and subject to the FIPB’s approval
thereafter).
The Valuation Norms43

There aren’t enough examples of homegrown digital media
companies in India. Most are early-stage ventures and given the
lack of broadband services and penetration, most companies
seem to be working with mobile apps for telcos or are vendors to
telcos with some kind of revenue share. To value them, one would
have to evaluate them in terms of the segments and sub-segments
they operate in or whether they are able to traverse across sub-
segments and generate additional value.
The question from a valuation perspective therefore, is: who
controls the platform? In India, the power is still either with the
telco or the content owner. In some cases, though, it is shifting to
the aggregators.
In this context, Komli Media, which has built a media ad-
vertising platform (including a mobile ad network) is a greater
beneficiary at the moment (enabling monetisation of traffic,
DIGITAL 335
viewership, etc.) than individual companies trying to sell ser-

vices to the consumer either directly or by partnering with the telcos.
The valuation considerations for startups are not entirely ob-
jective and have a degree of subjectivity to it. The key elements
are:
• Attractiveness of the business if it succeeds—potential

upside
• Market benchmarks at the specific stage of investment
• Especially at mid-later stage, thinking through exit sce-
narios and defining the range of entry pricing relative to
expected returns
• Quality of team
• Competition amongst venture capitalists for the deal
The above list applies to digital media as well as other businesses.

Table 6.1 The Shape of the Indian Digital Media Market—Infographic by Kapil Ohri, Former Head, afaqs!
Campus, the Knowledge and Training Arm of afaqs.com
Internet Mobile
Access via desktop/laptop Access via mobile

phone, tablet, Access via Feature Phone Access via Smartphone
comp.
data card
120 million users 90 million users 600 million total users, approx . 85 per cent feature phone users
What users do on internet ? What users do on internet ? What users do on mobile ?

Visit Download, Visit Download &
Websites Talk
websites use widgets Use apps
Mobile TV Text/SMS
Social Networking
websites Social Networking Watch (Video & Mobile TV)
websites/apps
Search Engines Download & Use
Search Engine/Search app • Apps – Social Networking, Messaging (eg WhatsApp),
Horizontals (Yahoo!,
MSN and so on) & Email and so on
Vercals (Moneycontrol, Horizontal (Yahoo!, MSN etc) & • Games
Carewale and so on) • Wallpaper
Vercal sites (Moneycontrol,
• Ringtones
Email like Gmail, Carewale etc.)
• Songs
Yahoo! Mail
Email websites/apps
Access internet to download & use apps, websites etc. Social
Watch Video (Youtube) Networking and E-mail dominates Mobile internet usage.
Watch Video (Youtube
website or app)
Size: `25 billion (mainly adversing revenue) Size: `250 billion (gross value of ringtones,
games sold on mobile: excluding voice and text)
DIGITAL 337
Table 6.2 The Digital Media Market—The Big Picture
Total online users (million) 227

PCs/Laptops et al (million) 127
Mobile, tablet, other devices (million) 100
Total digital ad revenues (` billion, 2012) 21.7
Search advertising (% share) 38
Display (% share) 29
Social media (% share) 13
Mobile (% share) 10
Video (% share) 7
Email (% share) 3
Total digital pay revenues (` billion) 250
Source: IAMAI, TRAI, FICCI-KPMG Report 2013, industry estimates.

Note: The figure for total online users does not factor in duplication between
laptop owners who also go online with their phone or iPad owners who use
a phone.
Kohli-Khandekar.
Caselet 6a Social Media, Defamation and Libel – The Legal

Guide
Publication of content over social media is often of a conver-

sational and personal nature, and may contain representa-
tions about other persons. In normal circumstance voicing
personal opinions or having a conversation with someone
about someone else may not materially affect their reputa-
tion since the audience for such information is limited to
specific persons or a confined group. However, having such
a conversation or voicing such opinions over social media
enables the content to reach a greater audience. In such cases
it could invite legal action for being defamatory.
(Caselet Contd.)
(Caselet Contd.)
Defamation is a cause of action in response to false state-

ments or representations that have the effect of lowering the
reputation of a person in the eyes of others. It is actionable as
a civil wrong, for damages due to the loss of reputation and
as a criminal wrong. Indian courts only recognise two types
of actions in defamation, civil and criminal. They do not dif-
ferentiate between libel (defamation in print) and slander
(defamation in speech).
Civil Defamation
There are four principle constituents of defamation,
(1) the statement must be false

(2) the statement must be made about the aggrieved per-
son’s reputation or business
(3) the statement must be understood by a reasonable
person to be of or concerning the aggrieved person
(4) the statement must be made out to a third person.
It should be noted that in the case of Tata Sons Limited

v. Greenpeace (2010), the Delhi High Court was concerned
with a complaint of defamation arising out of the use of the
Tata logo within an online game. Here the court adopted and
applied the principles and tests applicable in case of defa-
mation in the real world to the virtual world. Tata Steel was
involved with the development of the Dhamra port. In re-
sponse to the possible impact that the port would have on the
Olive Ridley turtles’ nesting and breeding grounds, Green-
peace created an online pac-man style game titled “Turtle vs
Tata.” The game involved having a user who guided a turtle
through a maze while avoiding four ‘Tata demons’ (drawn
to closely resemble the Tata logo comprising of a T in a cir-
cle). The game’s description also added that if the turtle ate
a power pill, it would be able to ‘vanquish the demons of
(Caselet Contd.)
DIGITAL 339
(Caselet Contd.)
development.’ The impression created by the game, the state-

ments describing the object of the game and the use of the
Tata name and logo in the online game were challenged by
Tata Sons as being defamatory. The court denied an injunc-
tion against the game. The case went back to the trial court.
The ultimate outcome is not known from public records.
Additionally, with respect to public figures, statements
concerning such person or an evaluation of such person’s
performance (even if such statements are false) would not
be actionable as defamation unless such statements are pre-
cipitated by malice44.
With respect to defences, alongside other remedies avail-
able in claims of civil wrongs (consent, accord and satisfac-
tion, limitation), a claim of defamation may be defended
by establishing that any one of the above listed factors is
absent in the case. Thus, the principle defence available
against a claim of defamation is either (1) that the state-
ment was true or (2) the defendant did not intend the state-
ment or publication to be viewed by any person other than
the complainant45.
Furthermore, the principle of privilege permits certain
professions a degree of latitude in response to claims of def-
amation. In this respect, journalists are provided some lati-
tude (qualified privilege) through the dilution of the ‘truth’
defence, in that they can defend a claim of defamation in
case they can establish that their statement is based on rea-
sonable verification of facts46.
Criminal Defamation
With criminal defamation, the Indian Penal Code offence of
defamation extends to statements or visual representations
that are made in relation to a person with the knowledge or
reasonably belief that such statement will harm the reputation
of such person, and such statement either directly or indirectly,
(Caselet Contd.)
(Caselet Contd.)
lowers (1) the moral or intellectual character of such person,

(2) the character of such person’s caste or calling, (3) the credit
of such person or otherwise creates an impression that the per-
son’s body is in a loathsome state or in a disgraceful state.
The IPC also lists out ten exceptions to defamation, which
relate to statements made in good faith. These could include,
among others, the public conduct of public servants, the
merits of a public performance or censures by persons hav-
ing authority (either in law or contract) over another in rela-
tion to matters that fall within the ambit of that authority.
Re-publication
Social media also has the ability to refer to or re-publish any
content published elsewhere. Where this content is defamato-
ry, a court may consider its re-publication to give rise to a new
action for defamation47. However, in case such re-publication
consists of reporting of a statement of the originator, without
any alterations or additions to the statement, it may be pos-
sible to argue, that the re-publisher is exempt from liability by
reason of acting as an intermediary. The cause of action will
then lie against the originator. For example, suppose a person
uploads a video clip onto YouTube.com that defames another
person. In such a case YouTube.com has not edited, changed
or altered the content, and is only passively involved in the
process of dissemination of the defamatory content. On this
basis it can respond to any charge of defamation by the person
affected by relying on the exemption provided to intermediar-
ies under the Information Technology Act, 2000. Therefore
the only person against whom the charge of defamation would
lie will be the initial producer of the video clip. Similarly, as
evidenced in the case of Harbhajan Singh vs State of Punjab
(See footnote 45) a defamatory statement may be uttered by a
person and quoted by a newspaper in the course of reporting
(Caselet Contd.)
DIGITAL 341
(Caselet Contd.)
on a event. In such a case, provided that the newspaper has

not edited or altered the content of the defamatory statement,
the cause of action for defamation would lie against the per-
son making the statement rather than the newspaper.
Caselet by Abhinav Shrivastava, an associate with the Law
Offices of Nandan Kamath in Bangalore.
Caselet 6b The Rise of Social Media
“You are what you share.”

—Charles Leadbeater
We Think: The Power Of Mass Creativity
If there is one thing that marketers around the world will

unanimously agree on, it is the unprecedented growth of so-
cial media in the last 5 to 10 years. According to a report
by Comcast, social networking was the most popular online
activity worldwide in 2011, accounting for 19 per cent of all
time spent online. This is up from 6 per cent in 2007. Social
networking sites now reach 82 per cent of the online popula-
tion worldwide or about 1.2 billion users, says a report from
comScore.
The numbers for the North American market reflect this.
According to Nielsen’s Social Media Report, 2012, Americans
spent 20 per cent of their total time on the PC and 30 per cent
of their time on the mobile, on social networking. The percep-
tion is that it is a young people’s thing. The reality—between
the second quarter of 2012 and the first quarter of 2013, Twit-
ter’s fastest growing demographic was 55–64-year-olds while
Facebook and Google+’s was 45–54 year olds, according to a
report by GlobalWebIndex.
Facebook is the leader in this market with more than a
billion users in the world. Facebook tops the social media
(Caselet Contd.)
(Caselet Contd.)
category with an 83 per cent share of total minutes spent fol-

lowed by the Tumblr (5.7 per cent), Pinterest (1.9 per cent),
Twitter (1.7 per cent) and Linkedin (1.4 per cent).
It’s not just that more people are spending time on different
kinds of social networks, but their online behaviour is begin-
ning to affect their offline behaviour in interesting ways. ‘So-
cial TV’ is a case in point. Almost 30 per cent of twitter users
tweet about what they are watching on television according to
Nielsen’s Social Media Report in 2012. About 41 per cent of
tablet owners and 38 per cent of smartphone owners said they
used their devices daily while watching television. They are
not just chatting with their social connections but also look-
ing up at deals or shopping or searching for information re-
lated to the advertisements they are viewing. This means that
marketers can use multiple platforms simultaneously to catch
the same viewer. This typically pushes up ad effectiveness.
In mature markets such as the US, consumers wary of push
advertising are beginning to rely on their global peers for
tastes, opinions and preferences thus changing the ‘consum-
er decision journey’ along the traditionally accepted ‘linear
purchase funnel’. In fact, word-of-mouth and online reviews
scored the highest in global trust in an advertising survey con-
ducted by Nielsen in 2012. In this study, television, newspa-
per and magazines, all dropped by around 20 per cent since
2009 on their trust scores. While marketers continue to invest
similar amounts on television, what is going to differentiate
their strategy is how they engage with their consumers to earn
goodwill in the form of likes, positive comments or feedback.
With social media being such an important part of people’s
lives, marketers are exploring the medium and tapping into
its potential in innovative ways either by using free chan-
nels like YouTube, Twitter and Facebook or paid advertising
options on the same channels and sponsoring blog content.
Some of the key learnings from their experiments are:
Content is king, especially when distribution is free: Over 89 per
cent of advertisers use some form of free social media advertis-
(Caselet Contd.)
DIGITAL 343
(Caselet Contd.)
ing on YouTube, Facebook, Twitter, Pinterest and others. So-

cial media is different from other forms of advertising because
consumers can play an active role by providing instantaneous
feedback and promoting content by sharing or retweeting, giv-
ing content the potential to go viral. One of the best examples
of success for this is a quirky, funny video released by the One
Dollar Shaving Club on their website. This was a small start-up
and couldn’t afford to spend on traditional advertising. Their
video went viral and the company’s server crashed within an
hour of its release. More than 12,000 people signed up for their
service in the first 48 hours. It also illustrates the democratisa-
tion of advertising and how small brands can use social me-
dia effectively without spending a ton of money. Social media
speaker and author, Jay Baer says, ‘The goal of social media
is to turn customers into a volunteer marketing army.’ Several
successful social media campaigns don’t just provide ads, but
entertainment videos for their consumers.
Engaging with consumers: Companies have the opportunity
to engage with their buyers in a big way by using social me-
dia. Cadbury UK thanked its fans when it reached one million
fans on its Facebook page by releasing a video that was shot in
a room filled with post-its of consumer comments. The video
then went on to construct a huge ‘Facebook-like’ button made
of chocolate and expressed gratitude to all its fans. This video
itself made their page more popular and many consumers
felt connected to the brand. Several brands conduct online
surveys, quizzes, and contests to get consumers involved. By
communicating with disgruntled consumers, they can con-
trol the conversation and prevent consumers from ranting
on third party platforms like Yelp.
Going ‘Glocal’: Brands can hyper-target audiences from a
very specific area as well as run a nationwide campaign at
the same time using social media. Food Lion, a grocery
supermarket store in the US, launched its new private label
brand using social media conversations only. Consumers had
(Caselet Contd.)
(Caselet Contd.)
to enter a contest on Facebook telling Food Lion what made

their neighbourhood special and based on replies they stood
to receive a cart full of groceries at their doorstep. Food lion
used Facebook to locally target consumers in three cities and
Twitter for mass communication to their entire fan base.
Following each food drop, Food lion posted challenges and
scavenger hunts on Twitter with a hashtag #Grocerydrop. It
invited all of its customers to join the conversation to win $100
gift cards. The campaign achieved a social media reach of 1.4+
million and 8.2 million media impressions and won a Shorty
award for the best use of social media by a consumer brand.
While a few brands have jumped on to this bandwagon,
most advertisers are actually proceeding with caution. Almost
70 per cent of them currently spend about 0-10 per cent of
their advertising budgets on social media in 2012, according
to the ‘Paid social media advertising report’ by Vizu, a Nielsen
company. And although 64 per cent of the advertisers have in-
dicated that they would like to increase their spending budg-
ets in the future, it will only be by a modest 0-10 per cent.
One issue: the disconnect between the metrics media sellers
offer and the one marketers want. The metrics on offer are
specific to digital—click-throughs, views and likes. However,
traditional advertisers demand metrics similar to offline adver-
tising. This helps them make effective cross platform choices.
Caselet researched and written by Sinduja Rangarajan,
a former qualitative researcher with TNS India and Colors.
Sinduja is currently studying journalism at the University of
Southern California.
Notes
1. Excerpted in parts from my column This Digital Snobbery, Mid-Day, 22
March 2013.
2. See Table 6.2.
3. This does not refer to digital’s ability to facilitate e-commerce, trade or
exchanges of any kind. It refers on to the medium’s ability to be a tool for
communication and entertainment.
DIGITAL 345
4. See Battle of the Internet Giants, The Economist, 1 December 2012.

5. The State of the News Media 2013, PEW Research Center.
6. While India has over 900 million mobile users, the real number is closer to
600 million if you factor in dual-sim cards or people with two phones and
people who have dropped out and no longer use their phone. 90 million is
the number of mobile users who are actively using it for internet access.
7. IAMAI: Internet and Mobile Association of India.
8. Digital Advertising in India, IAMAI—Internet and Mobile Association of
India.
9. Internet Advertising Bureau report for 2012, done by Pricewaterhouse-
Coopers.
10. Broadband is an Internet connection that delivers a relatively high bit
rate—any bit rate at or above 100 kbps. Cable modems, DSL and ISDN,
all offer broadband connections. In India, TRAI has defined broadband as
data speed of 256 kbps or above.
11. Platforms refers to the big brands that own key digital platforms such as
Google or Vodafone. See How the Business Works for details.
12. IBF:Indian Broadcasting Foundation: INS: Indian Newspaper Society:
IAMAI: The Internet and Mobile Association of India.
13. Excerpted in large parts from The rise of the aggregators, Business Standard,
10 April 2012.
14. The State of the News Media 2013, PEW Research Center’s project for
excellence in journalism.
15. Singh was a trainer in a digital marketing workshop I attended in February
2013 by afaqs! Campus. Much of what is attributed to him in this chapter is
from that workshop. My husband Sreekant Khandekar is a director in the
company that owns afaqs.
16. See Digital Advertising in India, 2013, on the IAMAI’s website.
17. comScore data. See http://www.comscore.com/Insights/Press_Releases/
2013/4/comScore_Releases_March_2013_U.S._Online_Video_Rankings
for details.
18. Social media and Lok Sabha Elections, April 2013, IAMAI—Internet and
Mobile Association of India.
19. See A Brief History of the Internet, Leiner et al. Some parts of the India
background has been put together in 2005 by Amarchand & Mangaldas
& Suresh. A Shroff & Company, a New Delhi-based law firm for the sec-
ond edition of this book released in 2006. The Advanced Research Projects
Agency (ARPA) changed its name to Defense Advanced Research Projects
Agency (DARPA) in 1971, then back to ARPA in 1993 and then again to
DARPA in 1996. The ISOC website refers to DARPA throughout the his-
tory portion.
20. According to the Internet Advertising Bureau’s glossary, a browser is a
software programme that can on request, download, cache and display
documents available on the World Wide Web. Browsers can be either text-
based or graphical.
21. The resolution read—The Federal Networking Council (FNC) agrees that
the following language reflects our definition of the term ‘Internet’. ‘Internet’
refers to the global information system that: (i) is logically linked together
by a globally unique address space based on IP or its subsequent exten-
sions/follow-ons; (ii) is able to support communications using TCP/IP
suite or its subsequent extensions/follow-ons, and/or other IP-compatible
protocols and (iii) provides, uses or makes accessible, either publicly or
privately, high level services layered on the communications and related
infrastructure described herein.
22. VSNL was acquired by Tata Communications in 2002.
23. The stories of Rajesh Jain, Ajit Balakrishnan and of Indiatime are recount-
ed in Edition two and three.
24. During 1998–2001, I was writing on information technology and specifi-
cally on the Internet out of Mumbai, so I saw some of this excitement first
hand.
25. David Gillies & Roger Marshall, Telecom Law, Butterworths, London, 1997.
26. A large portion on past history was put together by Kanchan Sinha of Am-
archand and Mangaldas and Suresh A. Shroff & Company, a New Delhi-
based law firm, for the second edition in 2005. Some of it was sourced,
with lots of gratitude, from Ashok V. Desai’s study on the Indian telecom
industry for The National Council for Applied Economic Research. Dr De-
sai, who was my colleague at Businessworld, was kind enough to share this
study with me while it was at the draft stage. The third important source on
the past history and evolution of the business was a paper put together by
Lara Srivastava of the Strategies and Policy Unit of the International Tel-
ecommunication Union (ITU) and Sidharth Sinha of the Indian Institute
of Management. This study is part of a series of Telecommunication Case
Studies produced under the New Initiatives Programme of the Office of
the Secretary General of the ITU. It was downloaded from the Internet
for the research on this chapter.In all the different sources the dates for
when the first system was set up are different. For the purposes of this
book, I am going with the one in the ITU paper.
27. VSNL was acquired by Tata Communications in 2002.
28. Later advertisers were not allowed to buy airtime in dollars on foreign up-
linked channels broadcasting into India, ostensibly to protect DD. How-
ever, this was done away with in 2004.
29. See Footnote 26.
30. CDMA is Code Division Multiple Access. According to the CDMA Devel-
opment Group’s website, CDMA is a technology that allows many users to
occupy the same time and frequency allocations in a given band/space. It
assigns unique codes to each communication to differentiate it from oth-
ers in the same spectrum. In a world of finite spectrum resources, CDMA
allows many more people to share airwaves at the same time, than any
other technology.
GSM is Groupe Speciale Mondiale or Global System for Mobile Com-
munication. GSM is an open, non-proprietary system and is one of the
most widely used telecom standards in the world today. According to the
GSM world website, GSM differs from first generation wireless systems in
DIGITAL 347
that it uses digital technology and time division multiple access transmis-
sion methods (against code division in CDMA). Voice is digitally encoded
via a unique encoder, which emulates the characteristics of human speech.
Both these technologies compete with each other currently, though even-
tually they will become one.
31. Hungama’s website May 2013.
32. IAB—Internet Advertising Bureau. A lot of the data on the definition of
metrics is sourced from the IAB’s website, especially the glossary of terms.
33. If 25 per cent of a video is viewed, then it is counted as one video view. For
example if 2.5 minutes of a ten minute video is viewed then it is one view.
Or if 15 seconds of a 60 second video is viewed.
34. CPM refers to Cost per Mille or Cost per Thousand or cost percentage. In
Latin, mille means thousand.
35. This section has been put together by Abhinav Shrivastava, an associate
with the Law Offices of Nandan Kamath in Bangalore.
36. Each of these organisations are collectively termed intermediaries; see sec-
tion 2(1)(w) of the Information Technology Act, 2000.
37. See section 79 of the Information Technology Act, 2000.
38. Shreya Singhal v. Union of India, Writ Petition(Criminal) 167 Of 2012
(next hearing scheduled for 19 July 2013 as of the writing of this section).
39. TRAI has been established under the Telecom Regulatory Authority of
India Act, 1997. It is the regulator for telecom and carriage regulator for
broadcast services.
40. http://articles.economictimes.indiatimes.com/2012-01-08/news/
30604493_1_high-security-communication-pan-india
41. http://www.hindustantimes.com/News-Feed/SectorsInfotech/Provide-
solution-to-intercept-VoIP-within-a-month-Govt/Article1-851651.aspx
42. The ambit of telecom services as per paragraph 6.2.15.1.1 of the Consoli-
dated FDI Policy (Circular 1 of 2013) includes Basic, Cellular, Unified Ac-
cess Services, National/International Long Distance, V-Sat, Public Mobile
Radio, Trunked Services (PMRTS), Global Mobile Personal Communica-
tions Services (GMPCS) and other value added services.
43. These have been put together thanks to a detailed note from Amol Dhariya,
director, IDFC Capital and Alok Mittal, managing director, Canaan India.
Canaan is a global venture capital firm.
44. Ibid; R Rajagopal v. State of Tamil Nadu, AIR 1995 SC 264.
45. Tata Sons Limited v. Greenpeace, I.A. No.9089/2010 in CS (OS) 1407/2010
(Delhi High Court).
46. R Rajagopal v. State of Tamil Nadu, AIR 1995 SC 264 relying on New York
Times Co. v. Sullivan, 376 U.S. 254 (1964).
47. Harbhajan Singh v. State of Punjab, 1961 CriLJ 710; In Re: E.V.K. Sampath,
AIR 1961 Mad 318. It should also be noted that in Watkins v. Hall, 1868 (3)
QB 396, the Queen’s Bench suggested that repetition of a slanderous state-
ment grants it greater weight and may result in greater injury to the person
affected.
CHAPTER 7
Out-of-home
The similarities between out-of-home media and cable TV are

startling.
I n the summer of 2006, Sumantra Dutta, (then) managing di-

rector, News Outdoor India (NOI) had spent over six months
talking to about 90-odd Out-of-Home (OOH) media owners
across nine Indian cities.1 NOI was a subsidiary of the Russia-
based News Outdoor Group which, in turn, is a part of the US$
34 billion News Corporation, controlled by Rupert Murdoch.2
The idea, said Dutta, was to set up a pan-Indian OOH media
company that controlled either by owning or by leasing at least
20 per cent of the total OOH media in India.
By the end of the year, NOI changed its direction and started
wooing civic authorities for long term contracts on bus shelters
and other civic infrastructure. Dutta made 21 presentations to
chief ministers in as many states. ‘We asked them for an oppor-
tunity to beautify one stretch and then take a call on whether to
award us the contract),’ remembers Dutta. This too did not work
out. The administration’s expectation of revenue did not match
NOI’s willingness to pay.
By the summer of 2008, just over two years after setting shop
in India, NOI had shut operations. This followed a global deci-
sion to ‘go slow’ on the outdoor business.3 Read that as: Shut it
down or hive it off gradually. The reason, say sources, was the
unorganised nature of the business across the world and the dif-
ferent and difficult regulatory regimes in each market.
The septuagenarian Murdoch is one of the most tenacious me-
dia players in the world. His company is the largest DTH opera-
tor globally and leads in some really tough markets such as Italy,
UK and Australia. He owns some of the largest newspaper brands,
many bought after bitter negotiations—The Wall Street Journal for

instance. He has not given up on the Chinese broadcasting market
after over 15 years of losses. Yet, he was giving up on OOH media.
NOI’s withdrawal illustrates the nature of the OOH media
business and is also a comment on its texture. Globally, it is a
fragmented, factitious, corrupt business that is more often than
not a regulatory tangle. The conflicting interests of civic authori-
ties, OOH media owners, landlords, media agencies and adver-
tisers makes it even more problematic perhaps than cable. ‘The
ground reality is that worldwide the OOH business is the same
(fragmented, corrupt and a regulatory nightmare),’ says Indrajit
Sen, former president projects, Laqshya Media.4
That is the reason why most people turn their nose up at OOH
media. It regularly gets attacked in newspapers—even in those
dailies whose owners have an interest in outdoor (see Caselet 7a).
Across the developed world, the OOH media industry commis-
sions a huge amount of research to fight this negative perception.
There are studies to prove that outdoor media does not cause
accidents, is not harmful to the environment, contributes to in-
frastructure spending, reduces civic bodies’ dependence on taxes
and helps the taxpayer.
The lack of love for OOH media perhaps also stems from the
fact that unlike other media, it provides no content. There is
nothing to read, watch or hear. The medium just gives adver-
tising messages, so the medium and the message are the same
thing.
Historically, OOH advertising referred to just billboards (bul-
letins and posters). These are the traditional forms of outdoor
media. In recent years, the Outdoor Advertising Association of
America or OAAA and several other industry associations across
the world have expanded the term to include all forms of ‘out-of-
home’ advertising. This could include bus shelters, kiosks, buses,
subways and rail, among other non-traditional forms of outdoor
media (see ‘The Way the Business Works’).
Whether or not it is liked, OOH media is a great business to
be in. If you get it right, operating profits could be anywhere
between 30–50 per cent depending on several factors—the mix
of a firm’s portfolio (billboards versus street furniture versus
transit media), the sites a company owns, its long-term con-
tracts and so on.
OUT-OF-HOME 351
In 2012, the Indian outdoor media market stood at `18.2 billion

(or US$ 364 million) in ad revenues according to the FICCI-KPMG
report. Most industry insiders reckon the figure is an underestimate.
Much depends on what you term as out-of-home media. So far in-
stadia, transit or other forms of outdoor have not been factored into
the spend numbers. The global OOH market stood at over US$32
billion.5
In the two years between 2006 and 2008 the Indian outdoor
media industry attracted a lot of investor interest. Private equity
players pumped in an estimated `9.64 billion into OOH media
companies.
For instance, in each of the three years from 2006 to 2008,
Laqshya raised a total of `4.67 billion from investors like War-
burg Pincus, UTI and Amwal Al Khaleej. Similarly in January
2008, GS Strategic Investments (Goldman Sachs) and LB India
Holdings Mauritius (Lehman Brothers) bought an 8.28 per cent
in Times Innovative Media, the OOH subsidiary of ENIL for `20
billion.6
Much of this came to naught when the global markets col-
lapsed in 2008 and advertiser sentiment turned in India. The
industry has hardly grown by over 2 per cent going by FICCI-
KPMG’s numbers. But the fundamental reasons why investors
found it attractive in the first place remain.
The more mass media there is, the more fragmented it gets.
Add to this rising purchasing power and falling attention spans.
The fact is that young people are reading less and also watching
less television. The fact is also that people are spending a lot of
time outside their home—studying, walking, travelling, work-
ing, hanging out. OOH media tries to attract them at these times,
either in the ambience of their consumption or in that of their
travel or work. A growing economy means more people enter
the workforce exposing a larger audience to outdoor advertis-
ing messages. Advertisers like OOH media for its local flavour
and because it is difficult for people to avoid the message. Unlike
television, radio or newspaper, you cannot change the channel or
turn the page.
These are the generic reasons. At a broader level, there are
three reasons why the Indian market is attractive.
First, one of the biggest areas of investment in India for pri-
vate and public sector alike is infrastructure. The supply of good
roads, train tracks, airports, bus shelters, skywalks, overbridges

and other such facilities is so poor in India, that this investment
is going to last for long. This investment in infrastructure has a
direct correlation with the growth of OOH media. Across the
world, infrastructure projects usually factor in advertising as a
revenue stream since they create a new supply of billboards. The
modernisation of existing airports, the development of new ones,
growing organised retail, construction of long-distance highways
and the increase in theatre chains and multiplexes are expected
to boost the growth of OOH media in India.
Two, the penetration of both cars and two-wheelers in India
is increasing. As it grows further, it will mean there will be more
people on the move or stuck in jams and, therefore, a larger audi-
ence for outdoor media. In fact, globally, vehicular traffic is taken
as an indicator of how well OOH media will work in a market.
Rising traffic congestion is a primary driver of OOH advertising’s
‘audience’ and thus its revenue. The largest OOH media markets
are the ones that have the longest average annual traffic delays.
In Delhi, the city with the maximum vehicular traffic, periods
of peak congestion now last for up to five hours a day (morning
and evening included). Statistics such as these make commuters
moan but the OOH industry smile. In study after study in the
US, Canada, Australia, UK and several other mature markets, ve-
hicular traffic is a big indicator of the potential for OOH media.
It is also used as an input for arriving at metrics on the viewership
and impact of outdoor media.
Three, the rise of organised retailing—in consumer goods,
apparel, hardware and films—will boost outdoor media in a big
way. That is because retail is not just one of the largest spenders
on outdoor globally; it is also one of the biggest organised suppli-
ers of it. In a fragmented and disorganised market such as India,
this is a big plus. A good example of this is Future Media which
was launched by Kishore Biyani’s Future Group on the back of
its stores. It basically exploits the media possibilities that exist in
owning hundreds of retail stores across millions of square feet.
Future Media offers television, print, activation and a host of
other services, just like any other media company. It works par-
ticularly well with companies wanting to reach small-town India.
There are many other reasons; but at a broad level, these are
the key indicators on whether a market is ready to take off or not.
The rise of these indicators in India coincides with the growth
OUT-OF-HOME 353
of product categories that need a heavy dose of OOH advertis-

ing in their media plan. Media and entertainment is itself one of
the fastest growing categories of spenders on outdoor. If you live
in Mumbai, you probably know about every new film, serial or
show that has been launched before anyone else in the country
does, because the city is plastered with hoardings. Then there are
financial services, retail, telecom and automobiles.7
Therefore, the rising investment in infrastructure, organised
retailing and increase in urban traffic are driving the excitement
we see in the Indian OOH media market. These are creating a
supply of OOH media from organised firms, say a Future Media
or UFO Moviez8 —that own it in large numbers across the coun-
try. This is advertiser heaven. The facility of being able to deal
with just a few companies and civic bodies makes life easier for
him. So far, the advertiser had been dealing with a large but dis-
organised market with thousands of OOH media owners. The
emergence of large organised sellers of OOH media is also forc-
ing consolidation in the disorganised part of the business.
So, while a bulk of the investment is going into funding the new
consolidated sources of OOH media supply, some of it is going into
helping outdoor media owners consolidate by acquiring smaller
firms. This investment comes not just from professional investors,
but also from large media companies such as BCCL and Jagran
Prakashan. Over the last decade most media companies have been
busy building a presence in OOH media. It helps add to the offer-
ing of a media company—outdoor goes especially well with radio
and newspapers, both local in flavour. This means better rates from
advertisers. And of course it helps bring in a better valuation.
In addition to this, the last eight years have seen several multi-
nationals trying to crack the Indian OOH media market. Among
these are JCDecaux, Clear Channel and Stroeer. They are as yet
minnows in a market that is dominated by half a dozen large In-
dian players and thousands of small ones.

While it is just over 10 per cent of the Indian cable industry in
revenue size, outdoor media has striking similarities with it—in
the way in which it has developed, in the way it is structured and
even in its growth trajectory.
The Similarities with Cable

Therefore to understand the key characteristics of the outdoor
industry in India, a comparison with cable is inevitable. Some of
the commonalities between the two are:
Fragmentation
Just like cable, the OOH media business is extremely fragmented.
This remains its biggest challenge. In Mumbai, the only city for
which any figures are available, an estimated 2,500 hoardings
(billboards) are owned by about 800 small outfits (Mumbai con-
tinues to define the contours of both the cable and the outdoor
business). ‘Fragmentation of the business is the biggest chal-
lenge,’ says Sunaman Sood, director, Acendo Capital, a boutique
advisory firm focussed on media and entertainment. There are
thousands of sites in India owned probably by an almost an equal
number of firms or individuals.
Ad hoc Regulation
Again, just like it happened for cable in the beginning, regulation
is non-standardised, ad hoc and differs across states. The model
in outdoor, according to Dutta, is based on picking up sites from
landlords at a pittance and selling them at a high price to adver-
tisers. There is no regulation on size or zones where hoardings
could be allowed and so on. News Outdoor’s plan of building by
acquisition did not work because the companies it was seeking to
acquire were living precariously. Their survival usually depended
on a stay order from some court or the other. Many of their prime
properties or sites were in litigation.
Dutta reckons that in small-town India, only 20 per cent of
the OOH media is legal. In many cities, the outdoor media busi-
ness is synonymous with a disorganised element much like the
cable business. However, unlike cable—which the lawmakers just
forgot—regulators have benefitted with the growth of OOH me-
dia because licences and permission are needed and civic bodies
make money every time someone wants to put up a hoarding.
OUT-OF-HOME 355
Even with a licence a hoarding could come down if the civic body
decides to change policies.
Similarly in cable proving ownership has always been an issue.
After the Cable Act of 1995, ownership of different areas of oper-
ation was not clear because the operators were not given licences
for each area. Anybody who had a licence could operate in any
area. Therefore, more than one operator could claim last-mile
ownership of the same area at the same time. That made outside
investment almost impossible.9
The moment a foreign buyer comes in, says Dutta, OOH me-
dia companies start spouting the valuations of information tech-
nology (IT) or OOH media companies in the US. However, the
framework within which this business operates in India is not yet
in place. In fact, many of the small Indian companies believe that
foreign firms cannot survive because it is a corrupt business. The
foreign companies on the other hand believe that: ‘Consolidation
is not happening because these guys (small players) don’t want
money, they want future-proofing,’ says Sen. It sounds like a mess
and it probably is one too.
As mentioned later, the fundamental currency of this business
is contracts, whether with landlords, civic agencies, retail chains
or any other owner of real estate where a hoarding could come
up. It is only when investors have contracts of some duration in
place that they are willing to put money into beautifying a park,
setting up bus shelters or maintaining airports. Until the regula-
tory regime around which the business is being done remains
unclear, the contracts are open to being challenged. The very
foundations of the business remain shaky. Therefore, putting in
money becomes difficult.
Disorganised and Entrepreneurial

In the early eighties cable started as an unstructured, entrepre-
neurial business10 (so did outdoor, though there are no clear
dates on when it all started). It is not a consolidated business.
Investors prefer size and a clear legal entity to deal with, so all
the money is now going into funding platforms that compete
with cable—DTH, IPTV or even mobile TV (for more details,
see Chapter 2—Television). That is exactly what is happening in
OOH media. Investment has started coming into options that

compete with the unorganised billboards business—in airports,
bus shelters, malls and multiplexes. This supply from non-tradi-
tional and organised sources is increasing. This in turn is forcing
the billboard business to pull-up its socks.
This new supply of inventory also comes with the possibilities
that digital technology is opening up for OOH media worldwide.
Among these is the possibility of having multiple advertisers
on the same ‘site’ or ‘display’ and the ability to measure its
impact.11For instance, there are companies such as Ishan Raina’s
OOH Media trying a digital-only strategy. The company which
was set up in May 2007 offers everything from event tie-ups
to creative services, to advertisers wanting to capture audience
attention in spaces where they have time. Most of OOH Media’s
4,500 screens are in office buildings, elevators and residential
buildings. ‘We have made our presence felt in almost all retail
formats including malls, in-stores, restaurants, bookstores, cafés,
multiplexes etc. besides other locations such as corporate parks
and residential societies,’ says Raina.
The Past
The International Past
According to Outdoor Association of America’s website, OOH
advertising can be traced back to the earliest civilisations. Thousands
of years ago Egyptians used tall stone obelisks to publicise laws and
treaties. In 1450, after Johann Gutenberg discovered printing the
handbill became one of the first forms of advertising (see Chapter
1—Print). It was only with the coming of the lithographic process
in 1796, however, that the illustrated poster was born. Advertisers
then started trying to figure out ways of keeping a message on for a
longer period of time. Later, to offer better locations in heavy traffic
areas, posters started getting their own structures.12
To begin with, roadside advertising in America was local.
Merchants painted signs or glued posters on walls and fences to
tell people passing by that what their shops sold. In 1850, exterior
advertising was first used on street railways. By 1870, close to
OUT-OF-HOME 357
300 small sign-painting and bill posting companies existed. By

1900 a standardised billboard structure was created. This led to
a boom in national billboard campaigns. From Connecticut to
Kansas, advertisers such as Kellogg and Coca-Cola began mass-
producing billboards for the national market.
Meanwhile, interesting things were happening outside the US.
French OOH company, JCDecaux created bus stop shelters in
1962. These immediately became popular with civic authorities
because shelters are built at no cost to municipalities and rely
on ad revenue for their upkeep. Around this time, the downside
in the business was evident in the USA. In 1965, the Highway
Beautification Act was brought in. It sought to control billboards
on interstate and federal-aid primary highways, by limiting them
to commercial and industrial areas, requiring states to set size,
lighting and spacing standards. In the 1970s, a clutch of billboard
companies commissioned studies at MIT in the painting of bul-
letins by computer. This ultimately led to computer painting on
vinyl. By 2002, Arbitron and Nielsen began testing the feasibility
of developing ratings to measure viewership of OOH media.13
The American OOH media industry has had only three bad
years in the last 40 years. These were in 1992 (in the wake of the
Gulf war), in 2001 (a recession, the 9/11 terrorist attacks and the
bursting of the dot-com bubble) and in 2009 (post the Lehman
Brothers crash and its impact on the global economy).
The Indian Years

Back home in India, there are no clearly documented dates on the
genesis of the outdoor media business. But it had been around
for some time, before the firms you and I hear of came into be-
ing. Like most other media businesses, OOH media first took off
in Mumbai. Creation Publicity, one of the largest billboard firms
in Mumbai, was set up about 60 years ago by four brothers. The
first few initiatives involved cinema slides, among other things.
In 1992, when Kalpesh Vora joined the family business, it was
relatively uncomplicated, he remembers. There were hardly any
players and most hoardings were hand painted, a process that
took 2–3 days. ‘It was a relaxed though laborious business. There
were no mobile phones and we dealt directly with clients,’ says he.
Most advertisers usually booked hoardings for 3–6 months, mak-
ing it a fairly steady business. Fresh from the US, Vora tried his
hand at various initiatives. To entice advertisers, in 1994, Crea-
tion started offering seven days of extra display in lieu of painting
charges. There were, he estimates, no more than 30–40 hoardings
in Mumbai, most in the upmarket Southern part of the city.
Around the same time, in 1992, Vandana Borse, a pathologist by
training, was looking at business ideas that would offer flexibility
in terms of time in addition to a good income.14 That is when she
spotted hoardings. The math was simple—if she had the permis-
sion from a landlord to put up a hoarding, she could make any-
thing over `25,000 a month in profit. All she needed was a NOC or
No Objection Certificate from the secretary of the co-operative so-
ciety where she wanted to put up the hoarding in order to apply for
municipal permission. It took her almost an entire year to get her
first permission from the (then) Bombay’s municipal corporation,
Brihanmumbai Municipal Corporation (BMC).15 Subsequently,
every time she applied for permission to set up a hoarding, it took
seven to eight months, each. Her firm, Symbiosis Advertising, cur-
rently has 100 sites with different media units across Mumbai.
The history of the OOH media (and cable) business in India is
littered with examples such as Borse’s.16 She says, just like Vora,
that in the early 1990s the business was simple and the rules clear.
‘The ownership had to be clear, there had to be enough space
around, it had to fit into the BMC guidelines and nobody should
have objected to it,’ she rattles off the conditions. From 1993–
2000 everything was very strict and proper. ‘The guidelines were
very clear and there was strong logic to them,’ she says.
As liberalisation took off the overall share of OOH media in
the ad spend pie rose from 6 per cent in 1992 to 12 per cent in
199917 (see Table 0.2). One of the biggest fillips to the OOH media
business—paradoxically enough—came from another medium,
television. In the mid-1990s, when private entertainment channels
such as Zee and Sony were growing, they made extensive use (and
still do) of outdoor media to announce new shows and channels.
Feature film producers, traditional users of outdoor, too upped
their marketing spend.
It was at this time that the technology changed from hand-
painted hoardings to acrylic cut signage to vinyl. Of these, the
OUT-OF-HOME 359
last is what ushered in the sleek looking hoardings that are so

popular now. According to one estimate the early eighties is
when vinyl printing first came into the market. This meant that
outdoor media companies and creative people could use com-
puters to design posters. So the consistency of a Lux poster in
Bhilai matched that in Mumbai because the design and printing
were common—only the sizes varied.
The Mad Growth Years

After 2000 several changes took place in the business.
As the business started growing quickly, getting permission
became easy and ‘every Tom, Dick and Harry started coming into
the business,’ says Borse.18 That is when the deliberate misinter-
pretation of guidelines began in collusion with those in author-
ity. Dodgy money started entering the business. Politicians, local
toughies, everyone got into the act of shoving a couple of poles
wherever they wanted to put up billboards. And yet the demand
kept outstripping supply.
This prompted the entry of specialist OOH media agencies.
Earlier, OOH media was bought by the sales department of com-
panies.19 There was a historical reason behind this. Outdoor is an
extremely local medium. Dealers and local sales offices have their
own promotional budgets. Many used these to advertise specific
promotions or events in local print, radio or outdoor. Hoarding
owners sold their sites directly to the local sales offices of, say, LG
or Hyundai.
By 2002, a larger portion of local buys were taking place
centrally because small-town India had started growing. As ad
spends on OOH media rose and the buying got more compli-
cated, advertisers started paying it more attention. It was no
longer about buying just one hoarding in a city or a few cities.
It could be 20 in one city, 10 in another and so on and forth
for varying periods of time. The buy could, in the same city,
consist of 10 hoardings, 20 bus shelters, 20 train station pan-
els and so on. Vora thinks that one of the first companies to
use the whole multiple hoarding strategy well was television
brand Akai, then marketed by Kabir Mulchandani under his
firm Baron Electronics.
In order to bring method to the business, advertisers began

asking their regular ad agency to handle the buying of OOH
media, just like they managed the buying of television time or
newspaper space. Ogilvy & Mather, JWT and Mudra, all set up
divisions that would look specifically at buying OOH media
across a bewilderingly fragmented national market.
The other change was that large media companies got into the
act. Just like the agencies this was about providing a 360 degree
communication solution to advertisers.20 Of these, outdoor was
one among other options such as activation, events, digital or
other media. Jagran Prakashan launched Jagran Engage, BCCL
has Times OOH under ENIL, Mid-Day came in (and later joined
hands with Clear Channel). For most media owners it was a nat-
ural extension of their business.
Last, the technology of the business and even its terminology
started changing. The word ‘hoardings’ became a no-no. You
were either a part of the OOH media industry or sold street fur-
niture (see ‘The Way the Business Works’). Clearly, the entry of
the big boys in both the buying and ownership of the business
put a greater emphasis on these things, especially because inves-
tors understood the language. Just as ‘the last mile’ and ‘digitisa-
tion’ became common in cable, so did ‘OOH’ and ‘digital’.
All these changes were the result of an expanding economy
and growing ad spend. There was growth of new categories of ad-
vertisers such as telecom, auto and financial services, all of which
needed serious local connect. Some of the larger players spent as
much as 30–40 per cent of their media spend on OOH.

The Influencing Variables
The economics of the OOH media business depends on a few
variables. These are the OOH format, location, regulation and
length of contract. These impact everything, revenues, costs and
margins, for every player in the value chain that starts from the
site owner and ends with the advertiser. It is important to under-
stand these before figuring out the players in the chain.
OUT-OF-HOME 361
The Formats
The different kinds of ‘displays’ or OOH media are roughly clus-
tered into traditional and non-traditional (see Table 7.1).21
Traditional OOH media These could be bulletins, posters, large
(or what are called spectacular) displays among other things.
The names vary according to sizes and countries, but this is es-
sentially the good old hoarding or billboard. The Indian OOH
industry is still driven by billboards which form 60 per cent of
all OOH media by value. Globally, the structure varies depend-
ing on which country or company you are talking about. For in-
stance, in the US, 74 per cent of the industry is billboards, while
in Europe street furniture forms over half the market.
Non-traditional OOH media There are three types of non-tra-
ditional outdoor media, essentially clustered based on location.
Some could easily fall into either of the clusters. These are:
Street furniture Street furniture includes bus shelters, street-
lights, trash bins, newspaper stands, benches, shops and phone
booths, among scores other things. This form of OOH media in-
cludes anything that is on the street and can be used for display
or advertising. The street furniture business took off in 1962 in
France and was ‘invented’ by JCDecaux. The company remains
the largest street furniture operator in Europe.22 The idea is to
provide towns and cities with civic infrastructure and maintain it
for the life of the contract free of charge. This is offset by the right
to sell ad space on such construction. Street furniture contracts
tend to have a duration of anywhere between 8–25 years. In
France, the largest market for this format, the tenure is generally
10–15 years. Street furniture contracts are usually won through
competitive bidding processes.
Transit media This includes any media that tries to capture the
attention of consumers when they are in transit; thus, posters and
billboards at airports, inside trains and elevators, among scores
of other places are termed as transit media. The contracts with
transit authorities last for five to 10 years and involve revenue
sharing and/or minimum guarantees to the authority that owns
these places. There is some wastage in transit because the message
meant for some of the areas a bus is going to, may also end up
going to other areas which are not targeted.
Ambient media This is by far the most interesting, evolving
form of OOH media. This refers to media put into place within
the ambience of various activities that a consumer does through
the day. This could be media inside a retail store, in a building (a
café, a physician’s clinic, a residential building, movie theatres), at
an automated teller machine (ATM)23 and dozens of other places.
Future Media and OOH Media are good examples of companies
that own ambient media.
The Location
Just like as in real-estate, location is the key in outdoor media. It
determines everything from rates to regulation. ‘OOH is like the
real-estate business, you grab land, get contracts. Advertising is
the revenue, so there is a media connection, otherwise there is no
similarity to media,’ says Dutta. ‘You can make all the judgements
you want about OOH on a map,’ says Mangesh Borse, director,
Symbiosis Advertising and associate dean at Welingkar Institute
of Management. So, all the well-known locations in Mumbai such
as Haji Ali and Marine Drive command the best prices because
these areas are home to a target audience that every advertiser
hankers after and also home to the decision-makers on those ad
spends. And they are the conduit to the city’s commute toward
work.
The location not just within a city, but within a country or in
the world, is also key. For example, sites or displays in areas prone
to storms trade at a discount. Clear Channel has operations in
markets such as New Orleans and Miami which were hit by hur-
ricanes. Within India, sites in small towns will command lower
rates than those in big cities.
The Regulation
Since outdoor is a local medium, regulation varies from city to
city and country to country. Analysts do not like OOH media
companies with high exposure to international markets because
OUT-OF-HOME 363
of the extreme variations in regulation. In the US, for instance,

the OOH media company owns the permit that allows it to solicit
advertising on a display and not the owner of the site or land on
which the hoarding exists. When a lease expires, the OOH media
company is the one in a position of power. If the landowner or
site owner, the person who owns the location on which that dis-
play exists, is not happy with the terms of a lease, the billboard
company can remove the display because it owns the permit. So
the site owner loses the rental income.
It works the other way in Europe—site owners own the permit
to solicit advertising on a display. When a lease expires, the land-
owner can call for new OOH media firms to bid. As a result, the
media companies compete for the right to sell advertising time,
but do not own the assets that give them the right to do that. In
many cases, the outdoor media companies offer revenue sharing
or revenue guarantees to the site owners to sweeten the deal. This
difference in regulation explains why lease or rental expenses are
often 20 per cent of the revenues of an OOH media company in
in Europe against 5–10 per cent in the US.
The Length of the Contract

The length of the contract is an important variable in determin-
ing revenue stability and therefore valuation of the OOH media
company. Longer-term contracts reduce the industry’s volatility
relative to other media. The length of contract also depends on the
format. For instance, street furniture contracts tend to have a dura-
tion of 8–25 years. In France, the largest market, the general length
is 10–15 years. In the US, contracts are typically for one, six or 12
months. In the UK, the length of advertising contracts is typically
7–15 days, just like in India. This makes for a more volatile market.
The Technology
So far, billboards and other forms of outdoor media have used
vinyl, the last major technological breakthrough in this medium.
These are static. That means they do not move or change over the
contract period. A digital billboard, on the 24other hand, shows a
static message for six seconds and then transitions to another ad-
vertisement. Digital billboards are energy-efficient and resemble
ads printed on vinyl or paper. They are controlled via electronic
communication and are on a secure network. The copy or mes-
sage is created on a computer.
Converting static displays into digital opens up a whole range of
possibilities. It allows several advertisers—instead of just one—to
occupy a site. That translates into multiple advertisers who bring
in multiple revenues per site. In 2005, when Clear Channel was
experimenting with digital displays in a few markets, the revenue
per site jumped over three times with inventory still available to
sell. When Lamar, an American company, implemented digital
displays in some of its markets, the revenue per site went up eight
times, from US$ 5,000 to US$ 40,000 a month. In the UK, 20 per
cent of outdoor advertising revenues already comes from digital.
Advertisers are willing to pay more because digital sites help
them change the ad to accommodate either last-minute sales
opportunities or advertise different products during different day
parts. For instance, a media company can promote a newspaper
in the morning and an alcohol company could promote a whisky
brand on the same board in the evening.
The Value Chain

Given these variables, how is the business structured? Think of
the outdoor media business as a value chain with four players in-
volved, each with its own business dynamics. The first link in the
chain is the site owner, the second is the OOH media company,
the third is the media agency and the fourth is the advertiser.
The Site Owner

Depending on the form of OOH media, billboards, transit or am-
bient, the ownership of the place where the hoarding or media is
placed will change. For example, if OOH Media (the company)
wants to install three screens in a restaurant, it will have to deal
with the owner of the restaurant. If ENIL wants to offer airports to
its advertisers, it does a deal with the Delhi International Airports
Authority (DIAL) for Delhi and with a similar body for Mumbai,
OUT-OF-HOME 365
and so on.25 In case of street furniture, the owner is usually a civic

body, so tenders come into play. A company that wants to put up
a billboard at a building or residential complex has to deal with
the housing society or resident’s association. The nature of the
site owner differs according to the location and deals. The rev-
enue streams for site owners could be:
Advertising If Creation owns, say, 65 sites across Mumbai, it could
market them on its own to advertisers such as Vodafone or Reli-
ance. Alternatively, it could go through an agency such as Portland
from JWT which buys billboard space on behalf of advertisers.
Rental This is the biggest source of revenue for small OOH media
companies. For instance, if Creation does not have enough to offer
advertisers in Bandra it may decide to take on lease sites owned by
smaller operators such as Symbiosis. The latter rarely sells ad space
on its own hoardings, it just leases them out to larger player such
as Creation who in turn aggregate, say, 100-such hoardings and
sell them to advertisers or their agencies. This makes it an annuity
income business for Symbiosis which does not have to bear the
risk and gets no share in the upside. Unless, of course, it is worked
out in its agreement with Creation that after, say, `200,000—which
is guaranteed—a percentage share of the revenue would come
to Symbiosis. This is called a minimum guarantee deal. In either
case—plain rental or a minimum guarantee deal—the site infra-
structure and maintenance is the responsibility of the owner, Sym-
biosis in this case. The marketing and revenue is Creation’s job.
In billboards, rental depends on when the deal was done, says
Mangesh of Symbiosis Advertising. Some of the older hoardings
in prime spots in Mumbai were locked in with old rental agree-
ments that continue to date. In transit, ambient or street furni-
ture, rental is just one aspect of revenues. That is because in these
cases the site owners are residential buildings or civic authori-
ties that have multiple revenue sources. The Bombay Electric and
State Transport (BEST), which runs buses in Mumbai,26 earned
almost `600 million from tenders issued to Times OOH and
Prithvi Associates in 2006. Its total income from plying buses in
the city was about `12 billion in 2006–07.
Rental plus advertising This would apply to players like Sym-
biosis. It leases out a bulk of its sites and also sells a few directly
to advertisers.
Lead generation Tagit, a tagging software, enables mobile phone

users to respond to ads. It allows ‘tagging’ a brand’s advertisement
with digitised 2D (two dimensional) bar codes in newspapers, tel-
evision or billboards. Tagit enables anyone to pull any content on
to a multi-media phone. Think of the possibilities if you could just
aim your phone at a hoarding (or a television or theatre screen)
and respond to an ad or take part in a contest. Similarly, Bluetooth
campaigns have already been growing in the UK, allowing con-
sumers to download content from advertising signs they pass by.
There are several such technologies in an experimental stage. A site
owner would get a percentage of the money that mobile companies
make from messages sent after seeing their displays and/or from
companies that get leads on consumers. For instance, if 100 people
called to enquire about an insurance policy after seeing a hoarding
that displays an ad of HDFC-Standard Life, then the site owner
stands to make an agreed upon amount per enquiry.
The typical costs for a site owner are:
Capital costs These are very high in the case of transit and
street furniture. An average bus shelter needs an investment of
anywhere between `0.6 to `0.8 million27 The operating cost is
roughly `35,000 to `50,000 a year and the revenue could be any-
where between `45,000 and `250,000 a month. This cost remains
the same whether you put up the shelter in Mumbai, a larger ad
market compared to, say, Nagpur. Also, a bulk of the money is
spent in making the shelter or putting up whatever investment is
needed in, say, beautifying a park or a heritage building. The rest
of it is overheads. To offset the higher costs, media companies
usually look for long-term contracts, over 20–30 years in order
to recoup their investment and make money.
Rental If the firm selling the billboard is not the owner, the
rental is a cost for the company (as in the example of Creation
and Symbiosis in the earlier section). This could make up 30–40
per cent of costs.
Taxes, licences and others These are the environmental costs of
operating that business in any city and could go up to 30 per cent
of the total costs.
Other overheads These include everything from staff to admin-
istration costs and could be 10–15 per cent of total costs.
OUT-OF-HOME 367
Operating margins could range from anywhere between 30–

50 per cent (15 per cent net) depending on the combination of
variables at play. Billboard operating margins usually range be-
tween 13–20 per cent in mature markets while transit could be
5–10 per cent.
The OOH Media Company

It may seem as if the site owner and the OOH media company
are one and the same. That, however, may not always be true. In
the earlier example Creation is the OOH media company and
so is Symbiosis. For instance, Times OOH does not own the bus
shelters it runs, it has got them on lease from the civic authority
in Mumbai. Jagran Engage may take on lease sites from a large
number of small players such as Symbiosis. So far, this industry
has been full of site owners who also run the outdoor media com-
pany. But as the big boys come in and the structure of the busi-
ness changes—the site owner may not necessarily be the OOH
media company. Also, some of the new formats such as ambient
media create entirely new categories of site owners such as retail-
ers who own millions of square feet across the country and usually
sell the media space in their own stores.
For clarity’s sake, we could define the OOH media company as an
aggregator which may or may not own sites. The revenue streams
for outdoor companies will be the same as that for site owners. The
proportion may, however, vary. For instance, for Future Group, the
proportion of revenues from its core retailing business would be
far higher than the media business. The costs too would differ and
so would the margins. There would be a higher proportion of over-
heads for media companies, the margins would be thinner but on a
larger spread since most operate at a national level.
The OOH Agency

The OOH media agency is a relatively new entity in the Indian
context. Most are barely 5–7 years old. They help figure out the role
of outdoor in a campaign based on the marketing objectives. Then
comes the planning and the buying for which they are paid 1–2
per cent of the spend as are media agencies. For instance, Mudra
or Milestone Brandcom, plan and buy OOH media on behalf of
clients from telecom, media automobiles and other categories.
The Advertiser
Just like in other media advertisers could be from across catego-
ries of products and services that are widely consumed in any
market. The only difference is that local advertising could be a
big component for outdoor. In India, as in the UK, the big ad-
vertisers are those with a national presence. A large chunk of the
buying is ‘network’ buying. The way the advertiser looks at OOH
media is, however, hugely determined by metrics, a contentious
and problematic area in India as elsewhere in the world.
The Metrics
The need for metrics on cost per thousand, reach, frequency and
time spent in OOH media is the same as in any other media. Meas-
uring the efficacy of hoardings, billboards and other forms of out-
door, across thousands of different localities for dozens of formats,
in hundreds of towns and cities is a nightmare in a country like
India. It is compounded because the industry is as yet fragmented.
In its fight for ad budgets, OOH media does not have a currency
such as ratings (used for buying ad time on television) or reader-
ship (used to gauge print) that is easily accepted by advertisers.
The Global Market Scenario

Mature markets have measures in place because they have been at
it for longer. The quality of infrastructure and consolidation within
the industry in Europe makes it easier to put metrics in place. For
instance, in the UK, development of audience measurement be-
gan in the 1990s. There was a strong feeling within the OOH me-
dia industry that competing with television, radio or other media
would be impossible without these yardsticks. When the measures
were derived and used, the share of OOH media in total ad spends
rose from 5–6 per cent to 10–11 per cent. This is true for most
OUT-OF-HOME 369
markets—spends on OOH media have usually doubled once the

metrics fell in place.
The UK’s Postar28 (Poster Audience Research) was established
as the OOH advertising industry’s official audience measurement
system. Globally, it is acknowledged as a robust methodology
that combines a survey of people’s movements with detailed pan-
el quality classification. This, in turn, is used to provide a meas-
ure of the likelihood of an individual seeing a particular display.
According to most of the research material available, Postar gets
the closest to the relationship between ‘opportunity to see’ and
‘actually seen’ for OOH media.
In the US, Italy and Switzerland, audience measurement systems
have incorporated GPS or Global Positioning System technology
to measure the movement of audiences exposed to OOH media.
The Indian Scenario

In India, ‘There are no metrics for OOH media, it is only watch-
ing, noticing and reading. It is a business of judgement,’ says
Mangesh. Besides pictures, dates, some kind of certification and
traffic numbers there is not much that is done. As a result, many
media buying agencies either have their own systems or do re-
search on and off. These are then used to plan for advertisers or
to pitch to new clients who are looking for help in buying OOH
media. Some of these studies are also conducted by media owners
for use in selling their sites to advertisers. There are three such
examples that I came across.
One of the earliest attempts reportedly was OSCAR (Outdoor
Site Classification and Audience Research)—a study was con-
ducted by Mode, Aaren and O&M in Mumbai in 1993. The idea
was to evaluate the major sites in the city and develop a weight-
based index on variables such as visibility, angle, competition,
deflection, obstruction, height and illumination. The purpose of
the index was to arrive at a gross Opportunity to See (OTS) for
each hoarding. This meant accounting for things like the number
of pedestrians, the angle of vision, vehicles passing by, proximity
to other ads, environment and lighting.29
Another attempt later was at Mudra’s Prime Site by then CEO,
Indrajit Sen.30 He claims he set in motion certain basic house-
keeping measures. These were photographing the hoardings after
the ad had appeared as proof that the campaign had indeed hap-
pened. (It is routine for agencies and media companies to accept
two or three bookings for a hoarding in the same period.) Then
there was monitoring to check if the lights were working, getting
them fixed, insisting on compensation for the evenings when a
billboard was not visible due to poor lighting. Prime Site also
commissioned research on the effectiveness of some sites versus
others, on traffic counts, waiting times and so on. All the param-
eters—size, illumination, angle to read and visibility—got rated
and a combination rating was devised. Then weights were added
to these. What it discovered, not surprisingly, is that location and
creative were most important in determining effectiveness.
In the mid-1990s, BOTS or the Burnett Outdoor Tracking Sys-
tem by (the then) Chaitra Leo Burnett was a study of the outdoor
medium using research findings in Bangalore, Delhi and Mumbai. It
was based on the similar studies conducted by Leo Burnett abroad.31
These, however, were isolated individual attempts. It was only
in 2007 that MRUC32, the industry body that commissions the
IRS, decided to come up with a research product to measure the
effectiveness of outdoor media. There are three objectives to this
research. One, develop an outdoor media planning tool for use
by advertisers and advertising agencies. Two, provide insights
into the quality of an outdoor site through a visibility index.
Three, provide coverage and frequency information for an out-
door campaign across cities, by city and by location. The status of
this research however was not very clear in April 2013.
The Possible Metrics

The metrics for different forms of outdoor media differ depending
on, among other factors, location. There are on most days separate
studies for airports, shopping malls or theatre chains. Some of the
metrics that the industry monitors globally to check efficacy are:
People Traffic
Whether it is a street, highway, mall or retail store, this is the basic
variable needed to know what kind of potential audience size is
being talked about. This is pertinent for all kinds of OOH media.
OUT-OF-HOME 371
Vehicular Traffic
Whether it is trains, buses or cars, vehicular traffic is a key to un-
derstanding the effectiveness of OOH media. For instance, speed,
volume, number of daily commuters, traffic jams, whether a larg-
er percentage of people are driving themselves or being driven,
what kind of vehicles they are driving— all of these are used to
arrive at measures of reach and effectiveness. Under POSTAR,
for instance, even within vehicular traffic there are parameters on
angle to road, line of sight, obstructions, illumination and so on.
Studies in several markets have shown that the mode of travelling
has a direct bearing on the probability of exposure. Pedestrians
and travellers in cars are discounted by 50 per cent to allow for the
non-viewing, while bus passengers are discounted by 75 per cent.
The Time and Distance for Commuting

This stems essentially from tracking vehicular traffic. For instance,
Canadian studies show that the population of commuters is growing
faster than the overall population of people. On an average, people
spent 65 minutes a day commuting over 50–90 km. The average ve-
hicle mileage, commute times, all become indicators of time spent
outside and not with other media. Another piece of research, this
one in the US, shows that a bulk of the mega-milers—or the peo-
ple who spent a long time commuting—do not read newspapers as
much as do others. This presents an opportunity for transit media.
The Time Spent Out of Home

In a typical week, Canadians spend 35 per cent of their time out
of home in some activity or the other such as travelling, pubbing,
shopping and so on.33 This, then, becomes an indicator of the
potential for OOH media.
The Period of the Display

A billboard is most potent when it is new. It becomes invisible to
a passer- by after some time because the brain becomes used to
seeing it. Research from mature markets suggests that billboards
become invisible after 30 days. This metric is used differently by

different types of OOH media. For instance, in a locality, the adver-
tiser could roll over ads as soon as possible to retain freshness. At
airports where the audience changes every hour, the same ad could
run for a longer time depending on the need of the campaign.
Cost per Thousand

Even with the metrics in place, outdoor media is generally priced
at a discount to other competing media. In the US, OOH media
CPMs are usually one-fifth of other media.34 That is because tra-
ditionally outdoor media has not been able to offer detailed or
real-time audience data like TV, radio or print. Also its impact is
less than that of an ad in a blockbuster show or film.
Not all out-of-home networks become large networks that of-
fer efficacy. In India, for example, except for cinema and retail
chains there are not too many options for the advertiser wanting
to buy OOH media on a national scale. He has to deal with doz-
ens of individual players. This apparently is a natural process of
evolution across the world.
The Regulations35
The Basics
The government of each state can promulgate laws, rules and
regulations to govern OOH advertisements, including their
location, installation, fee or tax and general terms and conditions.
Since the state is divided into districts and districts into town/
cities, each of which is governed by its own municipality or
administrative body, the regulations laid down by the local city
municipalities determine the extent and nature of control on
OOH media. The local bye laws and regulations of the city and
metro councils in particular are important since they govern the
details of how, in what manner and at what price the rights to
OOH media will be provided.
Therefore, the regulations and policy formulations of the
Municipal Corporation of Delhi (MCD) or BMC come into the
OUT-OF-HOME 373
picture. This is also based on the principle that ownership of public

spaces or anything which impacts the public is under the control
of public bodies and therefore it has an intrinsic power to regulate.
There is no overarching regulation that governs the OOH media
across India except for issues which arise under the common
law of the land, such as constitutional restrictions or principles
enunciated and applied by the Supreme Court of India.
For instance in 1997, the Supreme Court of India, in a public
interest litigation relating to traffic issues in the National Capi-
tal Region (NCR)—MC Mehta versus Union of India—directed
that any advertisement, which is a distraction to the motorist,
should not be permitted in Delhi. The civic authorities including
the Delhi Development Authority, the Railways, the Police and
Transport authorities, were directed to identify and remove all
hoardings on roadsides which were considered hazardous.
The Delhi Policy

The matter was revisited by the Supreme Court. In its order dated
24 April 2007, it directed various authorities to submit their policies
within four weeks to the Environmental Pollution (Prevention and
Control) Agency (EPCA) authority for the NCR. Thereafter, in an
October 2007 order, the Supreme Court accepted the guidelines
prepared by the MCD and directed them to be implemented.
However, various objections were filed by private advertisers,
public interest organisations, Railways and the Delhi Metro Rail
Corporation (DMRC). After considering these, the EPCA has now
submitted its finalised report on the Outdoor Advertising Policy
in Delhi and NCR to the Court in August 2008. This is one of the
most comprehensive attempts in India to look at the principles of
OOH advertising and its impact on civic issues.
Some of the salient features of the report are:
• The policy for OOH advertising will be driven, not by rev-

enue imperatives, but by city development imperatives.
• The policy will explicitly work to discourage visual clutter.
This will be done by increasing the space between the bill-
boards and in restricting large billboards to select areas of
the city, like its commercial hubs.
• The policy will actively promote large-size billboards in

commercial areas. These are defined as the metropolitan
city centre, district centre/sub central business district and
community centre/local shopping centre, among others,
in the master plan. In this case, the civic agency will work
to maximise the revenue gains, which can be used for city
development.
• The policy will promote the use of advertising in what is
commonly known as street furniture. These are devices
placed on public service amenities of the city like railway
carriages, buses, metro trains, commercial passenger vehi-
cles, bus shelters, metro shelters, public toilets and public
garbage facilities, to name a few.
• The New Delhi Municipal Council (NDMC) in its
submission to EPCA made it clear that it does not intend to
permit any hoardings in its area in the light of the historical/
heritage character of its areas and which would have a
direct impact on urban aesthetics. Instead advertisements
have been limited to street furniture, street lighting poles
and on utilities—bus shelters, public conveniences and so
on.
• No sign must block opportunities for natural light or ven-
tilation in buildings or across open spaces.
• No sign must be located to obstruct movement. Neither
should it be placed in a manner or technique that causes
risk to life or operations.
• Negative advertisements like those presenting nudity, hav-
ing sexual overtones, glorifying violence, weapons or are
psychedelic or illegal under any applicable law like the
Drugs and Cosmetics Act, 1940, would be prohibited.
• The guidelines prepared by MCD, divide the advertising
devices into four categories depending on the structure
and size. The guidelines lay down restrictions on the con-
tent, colour, size and placement for each category of the
advertising device. In brief, the four categories are:
(i) Billboards, unipoles, bypoles, railway bridge panels,
flyover panels and building wraps.
(ii) Public amenity mounted devices such as pole kiosk,
protection screen/nallah culvert advertising devices,
OUT-OF-HOME 375
informal advertising display boards, banners, post-

ers, vehicle-mounted devices, air borne mounted de-
vices, roof mounted devices and demo stations.
(iii) Bus shelters, parking landscape advertising devices
and traffic barricading.
(iv) Self advertising on fascia signs, awning sign and
projects signs, footway and roadside vendor sign for
self advertising, real estate advertising, welcome sign
and construction sign for self advertising.
This policy was adopted by the court and thereby made applica-
ble to the MCD. After the Supreme Court’s order, the Outdoor Ad-
vertising Policy was also adopted by the Central Pollution Control
Board. This, therefore, makes it applicable to all of India. 36
The International Lessons

The EPCA further assessed some of the policies which are adopt-
ed internationally. A few illustrations mentioned in its report are:
• The Australian government’s Report of the Road Safety

Committee on the Inquiry into Driver Distraction makes
it clear that visual clutter impacts driver safety. It also
quotes that a motor insurance company observed from its
investigations that the clutter of road signs and advertising
accounted for a number of crashes.
• The City of Malborough in New Zealand, for instance, in its
OOH advertising policy says that there is a need for signs,
but they may have an adverse effect on visual amenities and
traffic safety. It adds, that in particular, from a traffic safety
viewpoint, careful consideration needs to be given to the
location, design, size or type of sign along major arterial
routes, where the potential for conflicts with traffic safety
are highest. Their policy is to avoid the display of OOH ad-
vertising which may adversely affect traffic safety by caus-
ing confusion or distraction to, or obstructing the view, of
motorists or pedestrians.
• Beijing has decided to remove all hoardings within the city.
Its officials say this is being done to ‘to sanitise the city’s image’
and cranes have dismantled many of the 90-odd billboards

lining the city roads. An advertising ban has been extended
across most of the city. City officials want to prevent Beijing
from becoming one very big Times Square. Now, billboards
are to be allowed only along the fifth ring road encircling the
city—many miles away from the city centre.
• In many cities of the UK, local councils have removed
hoardings in the interest of improving the visual environ-
ment and image. These cities say that the objective of the
OOH advertising policy is ‘to seek the enhancement of the
physical character and visual appearance of the city’. These
cities argue that ‘promotion signs’—hoardings which ad-
vertise products—can significantly add to the visual clutter
in a locality and, therefore, are not encouraged.
Case History
A few of the salient cases in outdoor media are:
Nova Ads vs Secretary It has been argued that any restric-
tion on OOH advertisements is like a restriction on ‘commercial
speech’ and therefore has to be under the reasonableness pre-
scribed by Article 19(2) of the Constitution of India.37 This con-
tention was however negated by the Supreme Court in Nova Ads
vs Secretary where the Court held that ‘the fact that the hoarding
is on a building or on private land does not take away the regula-
tory measures relating to hoardings. There can be cases where
because of the size and the height, it can be dangerous to public
and also be hazardous. There is no structural safeguard in re-
spect of such hoardings. There have to be regulatory measures.
The Advertisement Rules do not regulate advertisement. They
regulate putting of the hoarding which is found to be objection-
able, destructive or obstructive in character. It cannot be said that
there is infringement of freedom of speech.’
P Narayana Bhat vs State of Tamil Nadu In this case the Supreme
Court stated ‘that the authorities concerned are empowered
either to refuse or grant licence/renewal or to remove the existing
hoardings only if the same is hazardous and a disturbance to safe
traffic movement.’
OUT-OF-HOME 377
The Valuation Norms

The roughly half a dozen deals in India in the last couple of years
have meant that there are enough benchmarks for valuation. In
any case OOH is a fairly straightforward medium to value.
The Variables
The valuation of an OOH media company usually takes into ac-
count the following variables:
Market Size
The size of the Indian outdoor media market is hardly a sliver of
any of the mature markets. So far it was the growth rate that ex-
cited analysts. But as that slows down, there have been no major
deals.
Revenue Mix
The traditional billboard business, with its high barriers to entry
and high operating margins, is considered to be the best segment
of the domestic OOH media industry.
Exposure to National Advertising

In some markets if a higher proportion of an OOH media firm’s
revenues comes from national advertising, it has an edge. This
is because national advertisers tend to book bulk, and fill up the
order book over a longer period of time.
Average Market Share

A share of 30–40 per cent or more always pleases the analysts.
The belief is that it is easier to manage pricing when you are the
biggest provider in each market. This of course holds true in a
tight supply market. When supply is still increasing and the lead-
ers are not yet established, it is a free for all.
Technology
The more digitised the network of hoardings an outdoor media
company has, the better its valuation. Digital technology allows
several advertisers to occupy the same site at different times; that
means multiple advertisers who bring in multiple revenues per
site. If an OOH media company has tagging software or some
other lead generating mechanism in place, it opens up another
stream of revenues and, therefore, a better valuation.
Market Mix
Expansion outside of home markets normally reduces valuation
for most global OOH companies. JCDecaux and Clear Channel
lose brownie points when they expand outside their home mar-
kets because of the uncertainty of the regulatory framework.
This is especially true if a company is looking at organic growth
in foreign markets and not at acquisitions. Funnily enough one
of the biggest reasons Laqshya Media has got `4.67 billion in
investment in three years is because it is expanding not just in
India but also in countries such as Sri Lanka, UAE, Africa and
Southeast Asia.
The Length Of Contracts

For this, see the section ‘The Way the Business Works’.
Occupancy
The occupancy of a billboard or the amount of time it is booked
in a year indicates the health of the business and helps analysts
make estimates on future revenues. According to some esti-
mates, average occupancy in Mumbai is nine months a year or
OUT-OF-HOME 379
about 75 per cent of the time. In the US or the UK, a 70–80 per
cent occupancy is considered a good number.
Media Mix
An OOH media company’s presence in other media also influ-
ences valuation. For instance, radio and outdoor media comple-
ment each other. Outdoor is viewed only outside of home. More
than one-third of radio listening happens on the move. Therefore,
for both media, the time-consumers spend commuting is treated
as prime time by advertisers. So, the local connect and there-
fore plug-in with local advertising is very strong. It is matched
only perhaps by newspapers. So, an OOH media company with
a strong presence in radio will get a better valuation than a rival
without a radio station.
Dependence on Other Media

If an OOH media company does not have any other businesses,
comparing it with others who do is a problem, especially as the
solo player will have a higher capital outgo. JCDecaux’s global
competitors are Clear Channel and Viacom. For both these US
companies, OOH advertising represents a small part of their
overall business. For JCDecaux, it is the only business. So, rela-
tive to other media companies, a direct comparison is difficult.
Table 7.1 The Shape of the Indian Outdoor Market
The players
The formats Site owners Outdoor media company Media buying agency Advertiser/client
Traditional
Bulletins Selvel Jagran Engage Ogilvy Landscapes Vodafone
Posters Creation Reliance (BIG Street) Portland (JWT) ICICI Bank
Spectacular displays Pioneer Serve & Volley Outdoor Tata Sky
Wall Murals Symbiosis Advertising Pioneer
Vinyl Wrapped Posters Bright Advertising Prime Site
Roshan Publicity Selvel
Creation
Non-traditional
Street Furniture
Bus Shelters Civic authorities/ Clear Channel
government
Kiosks JCDeceaux
Gantries Times Innovative Media
Mobile billboards Serve & Volley Outdoor
News Stands Laqshya Media
Phone booths
Telephone and electricity
poles
Transit
Buses/trams Civic/transport TDI International
authorities
Airports/planes Laqshya Media
Subways/rail
Trucksides
Taxi displays
Elevators
Autos
Gas stations
Ships/boats
(Non-traditional)
Ambient
Convenience stores Future Media Future Media
Shopping malls OOH Media OOH Media
Arenas/stadiums Laqshya Media
Resorts/leisure areas
Restaurants/pubs/cafés
Health clubs/spas
Colleges/university
campuses
(Table 7.1 Contd.)

(Table 7.1 Contd.)
The players
The formats Site owners Outdoor media company Media buying agency Advertiser/client
Movie theatres
Hospitals/physicians’
clinic
Office buildings
Residential buildings
Hair salon/parlours
ATMs
Book shops
Source: Author.
Notes: 1. The companies listed against different types of players are examples of firms in the space. They may or may not be in another space. For
instance, Creation is an outdoor media company and a site owner. 2. The list of agencies and advertisers is just to illustrate a point and is by no
means exhaustive.
Data compiled and analysed by Vanita Kohli-Khandekar. This table may be reproduced only with due credit either to The Indian Media Business or
Vanita Kohli-Khandekar.
OUT-OF-HOME 383
Caselet 7a Why the World Hates Outdoor Media?
Across the world, OOH media is the target of ridicule, anger

and protest. In the US, The Federal Highway Administration
faced flak in 2007 for saying that billboards do not lead to ac-
cidents. In Brazil, in 2007, authorities in Sao Paulo, the larg-
est city in the country mooted the idea of a ban on all OOH
media. It sparked off a debate. City planners, architects and
environmental advocates argued that the prohibition would
bring the prosperous South American city a step closer to
an imagined urban ideal. The other side of the debate had
advertisers and corporates who said the proposal could be
injurious to society, an attack on free expression and a dan-
ger to a $133 million industry that provided 20,000 jobs. Ac-
cording to them, consumers would have less information on
which to base buying decisions and streets would be less safe
at night with the loss of illumination from OOH advertising.
(The city finally did implement the ban and currently Sao
Paulo remains free of outdoor media.)
The pro-OOH media lobby has a point. The positive im-
pact of outdoor media is conveniently ignored in most pub-
lic debates about it in India too. OOH advertising companies
contribute hundreds of thousands of dollars in donations
and free advertising space to charities and communities, and
provide public infrastructure which saves taxpayers millions
of dollars. Each pedestrian bridge which is provided for and
maintained by OOH advertising usually means a local or
state government body can divert funds to something else.
There are markets where OOH media is viewed positively
by the public. Especially where local associations are active in
building bridges with society and informing them about the
benefits of OOH media and its contribution to the building of
civic infrastructure. According to January 2008 data from The
Outdoor Media Association of Australia, advertisers provided
Australian US$ 205 million (approximately US$ 182 million)
worth of community infrastructure in Australia, including
bus shelters, tram shelters, street kiosks, park benches, bins
(Caselet Contd.)
(Caselet Contd.)
and billboards, for use in advertising council services or road

safety messages. Little wonder then that an AC Nielsen study
released in September 2007 showed that 87 per cent of
Australians thought it was important for OOH advertising
to continue funding public infrastructure.38
Notes
1. Outdoor, Outdoor media and OOH have been referred to interchangeably
in this book. They mean the same thing. For a comprehensive list of what
OOH includes see Table 7.1. Also these terms refer to the Indian OOH
business, unless otherwise specified.
2. In August 2008, News Outdoor Group was the sixth largest outdoor media
company in the world, according to its website. News Corporation’s finan-
cial year is June-July. Dutta is now country head, Middle East, Africa and
Pakistan, Star Group.
3. By the end of 2008, News Corporation started looking for buyers for its
outdoor business. But after three years, in July 2011, News Corporation
finally managed to sell News Outdoor Russia for one-fifth of its asking
price. And it also sold News Outdoor Romania.
4. In March 2008 when I had interviewed him for this chapter, he was CEO,
Stroeer Out-of-Home Media India.
5. Source: Zenith Optimedia.
6. ENIL is Entertainment Network India Limited, the radio, OOH and events
subsidiary of Bennett, Coleman & Co.
7. In most mature markets the biggest advertiser on outdoor media, is retail.
For instance some years back JC Decaux, Europe’s largest OOH media com-
pany got about 10 per cent of its revenues in France (its home market) from
retailers. When the French government passed an order allowing retailers to
advertise on television from 2007 onwards, analysts went into a huddle to
calculate its impact on the JC Decaux’s topline and, therefore, its valuation.
8. UFO Moviez is a chain of digital theatres with 3192 screens (in April 2013)
across India.
9. See Chapter 2 on Television for more details.
10. This is also wonderful in some ways because cable grew unfettered by reg-
ulations which could have choked its growth in the formative years. See
Chapter 2 on Television for more details.
11. Display refers to an outdoor ad, just like a television or online ad.
12. All the information under ‘The international past’ comes from the OAAA
website.
13. Arbitron Inc is an international media and marketing research firm that
caters to OOH media, radio broadcasters, cable companies, advertisers
and advertising agencies in the US and Europe.
OUT-OF-HOME 385
14. Vandana Borse is my sister. She and her husband Mangesh run Symbiosis
Advertising. Symbiosis is one of the few verifiable examples one could use
for this book.
15. Brihanmumbai Municipal Corporation.
16. Much of this bit is Mumbai-centric because that is the only market where
we interviewed OOH media owners. Also it is the largest OOH media
market in the country.
17. It has fallen to 5.5 per cent in 2012, though on a larger base.
18. Borse’s comments are only in the context of the Mumbai OOH media mar-
ket where her firm operates.
19. It still is in many companies.
20. A 360-degree solution literally means offering all the options of commu-
nication that a consumer is likely to be exposed to. So, whether a media
company invests directly or partners with someone, it would offer, OOH,
radio, Internet, mobile and so on, so that advertisers have less reason to
go to competitors. In case of agencies (creative and media), this means the
ability create an ad, plan and buy space or time across these media.
21. The reader may have to keep referring to Table 7.1 which clusters different
types of OOH media, to better understand this section.
22. Going by Figures available in April 2013.
23. ATM machines are used by banks to dispense cash.
24. Sexy Signage, The Economist, 26 January 2013.
25. Mumbai and Delhi are now run by private companies. In most other parts
of India, the Airports Authority of India or AAI runs airports.
26. And also the electricity network.
27. These estimates are as in April 2013.
28. Sourced from the website of the Outdoor Advertising Association of the UK.
29. The details of OSCAR were sourced from Supriya Madan (1998).
30. Sen was CEO at Prime Site from April 2000 to 2005. He later joined among
other companies including Stroeer and Laqshya. He is currently the vice-
chairman of the Indian Outdoor Advertising Association.
31. Now, Leo Burnett. It is one of the leading advertising firms in India.
32. Media Research Users Council.
33. Out-of-home Marketing Association of Canada study conducted in 2006.
34. Cost per Mille or Cost per Thousand or cost percentage. In Latin Mille
means thousand.
35. This section was put together in 2008 by Anish Dayal, advocate, Supreme
Court of India and a specialist in media and entertainment law for the
third edition. There have been no major updates since then.
36. Update provided by Abhinav Shrivastava an associate with the Law Offices
of Nandan Kamath in Bangalore Source - http://www.cpcb.nic.in/upload/
NewItems/NewItem_119_Delhi_outdoor_advt_policy2008.pdf
37. Advertisements were classified as ‘commercial speech’ by the Supreme
Court in Tata Press Ltd. v. M.T.N.L. and Others. 1999 (5) SCC 139.
38. There has been no further update on that study. But it is an interesting
example of the strife-ridden relationship OOH has with society.
CHAPTER 8
Events
Everything is an event.
H ow do you define an event? Is it a presentation to a roomful

of dealers; is it a marriage, a product promotion at a mall,
a music concert or an award ceremony? There are hundreds of
such ‘events’. Do all of them constitute a business opportunity?
How big, anyway, is this opportunity? Coming to grips with the
event business is no mean task and some of the global research I
went through confirms that.
Therefore, the big triumph for the Indian events industry is
that there is a structure emerging to the business, that revenue
streams are becoming visible (see ‘The Way the Business Works’
and Table 8.1). Some of the credit for this should go to the big
boys of the Indian events industry—Wizcraft, Percept D’Mark,
Encompass or Showtime. In the middle of hyper-growth, most
have worked hard at figuring it out for themselves.
For instance, at one point in 2008, Wizcraft, one of India’s larg-
est event management companies, hired the services of consulting
firm EY. The idea was to understand where it stood and where it
could go from here. In the hustle and bustle of growth, Wizcraft
needed someone to make sense of it all. In the same year many of
the large firms joined hands to set up the Event and Entertainment
Management Association of India (EEMA). Its primary objective
is to lobby on behalf of its members.
The frenzied growth has pushed up the average size of event
firms in India to anywhere between `0.3 to `1 billion. It has made
them attractive companies to either buy or do business with. Be-
tween 2008 and 2012 there were nine major deals in the events
space. For instance in 2008, JWT bought Encompass Events and
in 2012 it bought Hungama digital for an un-disclosed amount.1
Figures on how much money was invested totally or in

individual deals is not publicly available, but the action suggests
some consolidation and clear investor interest in the area. In
addition, some foreign players—Reed Elsevier, EMap and George
P. Johnson—too have set up shop in India.
Just like the investment numbers, those on size and growth are
also not very clear. ‘It is very difficult to map this business, the big-
gest chunk is private events and that is not even a structured part
of the business’, says Shaju Ignatius, an entertainment consultant.
According to EY, the events and activation business did `28 billion
in top line in 2012. However, it is estimated that only 40 per cent of
the industry is organised. This means that the real size of the busi-
ness is closer to `70 billion. Even then, it is a fraction of the total
Indian media and entertainment industry (see Table 0.1).
Again, there are no benchmarks on what it is globally.2 There-
fore, we have a long way to go. On growth, the Indian market, as
usual, does well. The industry is growing at an average of 20 per
cent, says the EY report. Almost all the companies surveyed by
EY claimed to be profitable average operating margins of about
19 per cent of revenues.
That is not bad for a business that almost everyone looked down
upon as a ‘caterer’s and tent suppliers’ business’, till some time back.
Prashant Powar is general manager, Roundtrip Events & Produc-
tion Tanzania, Scangroup, Africa. Scangroup is a part of WPP, one
of the world’s largest marketing services group.3 He says:
When I started my career people asked me what is event manage-

ment? Today it is considered a glamorous and exciting field. Despite
the erratic working hours and immense hard work, the biggest and
most gratifying change is the pace at which this industry has evolved.
This then, is the second biggest change, after the structural

change. Event management, which was not considered a prom-
ising and credible profession, today ranks amongst some of the
top career options for those aspiring to be in the media business.
Many mass communication schools and colleges are now includ-
ing event management in their curriculum.
There are two fundamental factors driving the growth of this
business.
One, the investments going into below-the-line (BTL) have
jumped significantly.4 Of the US$ 8-odd billion that companies in
EVENTS 389
India spent on marketing in 2012, more than 30 per cent went to

non-advertising or BTL options. In mature markets, BTL accounts
for half or more of all marketing spend. In India, it has risen from
about 10–15 per cent in 2003 to about 30–40 per cent of total
marketing spends now. More BTL essentially translates into higher
spends on events, because most of BTL involves events in some
form or the other—either as an activation, contest or promotion
among many other things. The live brand experience is becoming
a powerful tool in experiential marketing according to research.5
This trend toward higher BTL spends is global. It is usually born
out of mass media fragmentation which results in a smaller bang
for the above-the-line (ATL) buck, a reality for India too.
Two, is the growth of small-town markets.6 In several product
categories, such as telecom, financial services and durables, growth
in the metros is slowing down and that in small towns is very high.
Earlier, communicating to reach this growth, even in the top 100
non-metro towns was a problem. Compared to Mumbai, Delhi or
Bangalore, the mass media options in Hissar, Tirunalvelli or Sangli
were limited—a local cable channel, the local DD station, the lo-
cal newspaper and AIR. Marketers desperate to reach small towns,
therefore, started using outdoor advertising and events. Now,
though mass media options are increasing, thanks to the spread of
radio, cable TV, DTH and other media, events still form a signifi-
cant proportion of spends in non-metro India.
Both these reasons combined to create an inexorable push toward
more events and form the underpinning of growth in this business.

The Big Issues
When I asked Powar whether foreign event companies could do
business in India and help change the structure of the market, his
response encapsulated the nature of the business very succinctly.
In my view the (foreign) company would find it extremely diffi-
cult to do business in India. They are habituated to strict time lines,
skilled manpower, schedules to the tee, unlike Indians who are used
to organised chaos. After working outside the country, I have seen
that the new and developing trend in India of working erratic late
hours is very rare in countries abroad. Considering the enormous
competition in India people are constantly compromising on per-

sonal lives, spending more and more time at work rather than at
home. Also the foreign company may have better material resources
but they are limited to the same vendors within India who work for
all the other local event companies. It is not possible to outsource to
international vendors for every project. Moreover, there are already
so many established and successful Indian companies that in my
view it will be complicated for a foreign company to survive the
competition and win the rat race. It is difficult but not impossible.
While the demand is high and things are moving in a positive
way, Powar mentions several issues that dog the industry. Some
will get sorted as the business evolves, others will need a regulatory
or industry-led solution. These are taken up one by one as follows.
Fragmentation
The first issue, fragmentation, and a somewhat haphazard struc-
ture, affect most other media segments in India. Companies are
still relatively small. The largest company, Wizcraft, had an esti-
mated revenue of `2.43 billion in the financial year ending March
2012. Compare that with £536 million which Informa, one of the
largest event firms made in the financial year ending 2012.7You
could put the difference down to currency, purchasing power and
size of economy differences. Also, analysts recommend that the
number of events is a better metric for comparing size. That is be-
cause revenue per event could vary with labour cost, size of the
economy and average spends per event. This stems from several
factors, the biggest of which is the lack of entry barriers. Just as an-
ything can be an event, anyone can claim to be an event manager.
A Pressure Cooker Business

The fragmentation means not just price and time competition, but
also makes the business a high pressure one. ‘The rest of the world
does not accept deadlines we do. We are willing to be exploited and
end up stressing ourselves,’ thinks Michael Menezes, managing di-
rector, Showtime Events. In 2007, when his team reached the US,
three months before the Incredible India at 60 event, that Show-
time was putting together, they thought they had loads of time.
EVENTS 391
‘The Americans said that there is no way you could do it, there
is too little time,’ remembers Menezes.8 Showtime did pull off the
event, but the strain was phenomenal.
Almost everyone in the business seconds him on this—the
business is tense and not just because of its fragmented nature.
‘It is a very very stressful business because there are too many
eventualities,’ says Mohammed Morani, director, Cineyug Group
of companies. Powar says:
Due to the prevalence of so many event companies, concept pres-

entations are taken from one company and given to the other
for execution. There is often no confidentiality or transparency
which is why a lot of companies have started charging a basic fee
for concept presentations.
The Talent Crunch

Inspite of its increasing respectability the events business faces a
severe paucity of people. This again is true for most media busi-
nesses (in fact most businesses) in India. Though its image is chang-
ing, ‘What was true for retail or radio a few years back is true for
the events business: people don’t want to join it. Radio is sexy now,
events is not so sexy’, says Sumeet Chatterjee.9 Events is a fairly people
intensive business. The more people you have the more events you
can manage. Though there are no estimates on the shortage, Deepak
Choudhary, managing director, EMDI Institute of Media and Com-
munication, reckons there are 6,000 event management companies
in India, with as few as four people in some of the smaller compa-
nies. This has, among other things, led to bloated salaries. According
to the EY report, payroll costs in the events business are about 13 per
cent of total costs. This is higher than the average of 10 per cent for
other segments of the media and entertainment business.
Lack of Infrastructure
Most of the issues mentioned earlier are evolutionary and will
get sorted by and by. The lack of infrastructure, however, will
need some regulatory support. There are no concert venues, no
auditoriums in India that can hold large audiences. For example

in Mumbai there are no concert venues except the Andheri Sports
Complex and the MMRDA (Mumbai Metropolitan Region
Development Authority) ground. In the US or UK, an agency can
just get in with the artist, plug and play. There are hydraulic stages,
removable seats and roofing among dozens of other concert and
event venue facilities. For instance, in the UK, auto exhibitions are
held only on grounds where a consumer can try driving a car too.
In the US, there are specific indoor concert venues.
In India, since commercial, residential and retail land use have
a higher demand and bring in more money than live entertain-
ment and sports spaces, there is very little possibility of growth
in venue infrastructure unless its development is incentivised.
For a parallel consider multiplexes. When they were made tax-
free in some states (such as Maharashtra) for five years, it created
an incentive for real-estate firms and film companies to invest in
their development. Finally, their success prompted the growth of
multiplexes even in states where they were not tax free.
Technology
The availability of technology also means mature markets work
faster with lesser manpower. For instance, it takes twice the
amount of time to put up a set in India as compared to some
developed markets. Part of it is simply experience but the other
part is the ability to import and implement technology easily. The
Indian event business cannot do it because tax structures and li-
cences make it unviable to bring in equipment or gizmos which
could jazz up an event. Also the fact is that the scale of the busi-
ness is as yet very small, the revenues for doing so are not very
assured. Of course you could argue that someone has to give it a
shot.
The Bureaucracy and Taxes

This issue too needs regulatory support. Permissions and taxes
are a big ‘headache’, say all event management companies. ‘Multi-
ple permissions are unique to India’, says Menezes. One estimate
EVENTS 393
puts the total number of licences needed to host a public event

at 17. For example, the entertainment tax in each state is differ-
ent plus there are a range of taxes on almost everything—from
hosting a corporate event in a hotel to having it at an open-air
venue. In Maharashtra, entertainment tax is 50 per cent whereas
in Delhi it is 20 per cent. There are service taxes, tax on profes-
sional fees paid to artistes and so on. At every point in the busi-
ness there is a tax—not just at the end or the beginning.
According to an estimate, taxes form about 13–20 per cent of
all costs for an event management company. This includes the
cost of greasing palms even when there is a legitimate event going
on. The founder of an event company recollects how he had put
‘bribes’ as an expense head in an invoice he raised for his client.
The accountant just shoved it under miscellaneous. The obvious
solutions—rationalisation of taxes and a one-window clearance.
The Way Forward

The reason valuations for event companies haven’t been high (see
‘The Valuations’) is because they have no apparent strength or
asset that can be valued. If there are two equally efficient event
management companies, how do you judge them? Compared
with ad agencies they do not seem to have a steady client rela-
tionship, much of it seems one-off.
Increasingly consultants and investors reckon it is the right
over original events or IPR (Intellectual property rights) that dis-
tinguish these firms.10 A company which has invested in creating
an IPR (like Wizcraft has in IIFA) or creating a core competency
that cannot be replicated easily (like Kidstuff Promos had in pro-
motional marketing)11 will be valued more seriously. The big leap
of faith for most event management companies is to move up the
value chain from being organisers and logistics people to being
the equivalent of the creative agency when it comes to events. Or
in having their own branded events that advertisers want to get
on to.
This is difficult for the following three reasons.
One, usually media companies, sports bodies or anyone else
that hires an event company owns the IPR (see ‘The Way the
Business Works’). It is an expensive back-breaking process for an
event company to build IPR. The industry is cluttered with firms

churning out similar events—film awards are a case in point. It
is almost impossible to distinguish one from the other. And at
the end of it, there is no guarantee that a branded event will make
money. The most profitable part of Wizcraft’s business is its corpo-
rate events. That is what fills up its order book. However it is IIFA
that Wizcraft is known for and which excites investors most.12
Two, if the IPR for the brand is established very strongly spon-
sors do not like getting involved because they believe that the
event itself is a stronger brand name—for instance though it has
changed several sponsors, most people think of Antakshri, as Close
up Antakshri or Saregama as TVS Saregama.13 The brand con-
nection has been made over the years and it is difficult to break
the mould. Also strong media event properties, such as Filmfare
Awards, are impervious to the sponsor brand. So, whether Idea
or Manikchand comes on board, Filmfare as a brand remains the
stronger one. ‘Basically what is required is for investors to pump
in money into properties that clearly belong to event companies—
like IIFA. Such events can afford to change their investors every
few years and can guarantee enough mileage to sponsors,’ thinks
Powar.
Three, Indian companies lack major properties because spon-
sors commit for a maximum duration of two years and what is
required at minimum is a five-year sponsorship deal. This rarely
happens. The F awards, launched some few years back to reward
excellence in fashion, are a case in point, says Powar. The event
died in its third year because of lack of sponsorship or investors. ‘It
is a funny situation—if there are investors, there are no properties
and where there are properties there are no sponsors,’ says he.
The Past
The Beginnings
The joke about the events industry is that it all started with
‘tambu/bambu wallahs’—meaning those who rented out the
tents and poles for events. From being food suppliers, caterers
or decorators, small mom-and-pop operations grew to doing
corporate events or large concerts. Some—such as Wizcraft or
EVENTS 395
Showtime—made the cut, most did not. ‘Many of the so called

“event companies” are good at quoting on equipment,’ says Chat-
terjee. ‘Vendors are turning into event management companies,’
adds Ignatius. A sample from the stories of the ones who made it
is interesting from the history perspective.
The Cineyug Story

Mohammed Morani’s father used to supply fireworks to the Indian
film industry.14 His brother Karim, who studied with actor Sunny
Deol in school, ended up producing the latter’s first film (Betaab)
and many more. So, there was a firm connection with the film
business and the players in it. In 1988 the Moranis went to London
for a show with Indian actors (including Deol’s dad Dharmendra)
organised by someone else. ‘It was very badly organised, terribly
unprofessional’, remembers Mohammed. So, the Moranis decided
that they would do good shows abroad with Indian actors. Their
first show at Wembley Arena in London went off well. Soon they
started helping people get the stars for their show. ‘We used to
be the Bollywood backend for Wizcraft’, says Mohammed who
swears by Wizcraft.
Each show the Moranis put together was like a film produc-
tion. Its team of 80 people (then) put together about12 shows a
year. In operational terms, this worked a bit like a film unit, they
would produce, direct and script the show. It cost between US$
1 million to US$ 1.2 million to put a show together. Cineyug, the
firm the Moranis own, was the backend, so the success or failure
of the show did not affect them. In 1997 the Moranis organised
a show by themselves. Now the firm does both—back-end work
for say a Zee Cine Awards as well as its own shows.
The Showtime Story

Michael Menezes’ story is different. He owned an advertising agen-
cy called Madhyam which he ran for 20 years. When he did a few
events for clients such as Hero Honda and KLM in 1997 he discov-
ered that they were more exciting than advertising. For Hero Honda,
for instance, Madhyam had to launch Hero Honda Street in 34 cit-
ies across India. His team was on the road for three months and
did a show every three days. ‘MNCs (multinational corporations)

especially the auto guys, understood events’, says Menezes. When
he sold Madhyam to Publicis in 2001, he set up Showtime Events,
now among the top event management companies in the country.
The Fountainhead Story

In the 1980s, Brian Tellis, a sales executive with an airline, dou-
bled as a musician and theatre personality. The latter were his in-
terests while the former paid the bills. So, in his spare time Tellis
compered shows on radio and sang as well. In 1993 when private
FM took off in India he was on air. As his schedule became im-
possible, Tellis decided that he had to choose one profession over
the other. That is when conversations with friends—Otis D’Souza
and Neale Murray—led to the forming of Fountainhead, an event
management company in partnership among the three in 1995.
‘We felt there was a need for good quality events; companies were
doing events that were handled by the administration depart-
ments,’ remembers Tellis.
The Growth Years

Ignatius reckons that in 1995–96 there were 4–5 major players.
Wizcraft in major events, DNA Networks in the business of organ-
ising concerts and getting international artistes in and so on. ‘By
1998–2000 the specialists started moving in, Encompass, Show-
time ...’ says Ignatius. Four factors were pushing growth. They are:
A Growing Economy
The first and most important one was a growing economy. In-
creasingly, companies were spending on everything from train-
ing to inductions. So, a lot of the stuff that comes under corporate
events actually may not have much to do with marketing. One
example is motivation or corporate strategy workshops which are
usually organised by outside agencies. According to one estimate,
large corporations were spending anywhere from `300 to `400
million on internal corporate events.
EVENTS 397
The Rise of BTL

Activation became big from 2003, says Pankaj Wadhwa, the
founder of Kidstuff Promos.15 Marketers, tired of the low re-
turns that advertising was delivering wanted more touch points
with consumers and wanted to offer a 360 degree brand experi-
ence. Brand managers started seeing the advantage of piggy-
backing on the reach of an event to communicate with their
target audience. So a Nokia, Pepsi or an Airtel would sponsor
a music concert if they wanted to connect with young people,
a theatre festival for a more evolved target audience, and so on.
Finally, the variety of events on offer—specialised business to
business, specialised business to consumer or pure business
to consumer—kept rising, giving more options to advertisers.
People like the Moranis, Tellis and his partners or Menezes
were fulfilling the marketers’ need to engage audiences—either
through a brand promotion at a theatre or a public space or
through a concert or college festivals.
Advertising agencies, till then the custodians of the brand,
could not help with this because events were—frankly speak-
ing—too downmarket a business. Events fell under BTL whereas
agencies handled only what was known as ATL. By 2004 it was
evident that one could not just look at ad spends but had to look
at marketing spends and BTL was claiming a growing share of
the pie for most of the large advertisers. It was also evident that
creative agencies did not have any strength in this area. This was
something only the specialists could do. This is when agencies
started feeling the need to get into the act—either by setting up
their own divisions, as Ogilvy & Mather did, or through acqui-
sitions. In 2005, Mudra acquired Kidstuff Promos and Publicis
took over Solutions Integrated Marketing Services (now Solu-
tions Digitas). Among other services, Solutions offers, direct,
digital and promotional marketing services.
The Growth of Television

There have always been a couple of big events that were hugely
popular on television—Filmfare Awards, the Femina Miss India
Contest to name two. However, from two channels in 1990, India
had, over 10 years, grown into a market with more than 160
channels by 2006.16 Most wanted original content for at least 8–10
hours a day. The large scale events, especially the ones which were
film and beauty-based, drew great viewership and ad revenue.
So, broadcasters started vying for rights to major events across
the board—in films, music, business, sports, and so on. Many
commissioned events or created their own brand of events—the
Star Parivar Awards, the Zee Cine Awards, an entire string of them
for CNBC. These in-house or commissioned events helped create
content and generate revenues—from sponsorships of the live
event and from ad time sold for its telecast.
Big Media Gets into Events

Soon media companies found that it made sense to convert some
of their content properties into events. ENIL17 operates its event
management business under the brand 360 Degrees which is
now Absolute Brand Solutions. ENIL, a part of The Times Group,
has been managing the Miss India and Filmfare awards, large na-
tional events. Now ENIL is developing more of its own properties
in the hope of better margins. This is true for Network 18, NDTV,
Zee, Star and a host of media companies. Many of them have
half a dozen or more events, which milk their content from other
media and use that to get a larger share of revenues from exist-
ing and new advertisers. For instance, Network 18 has scores of
investors meets annually under the CNBC brand and also awards
for tourism or the best states.
The demand for events—from corporate India, from market-
ers, from television channels and from individuals—has kept in-
creasing. But the eventual push for a structure to emerge came
from the growth of corporate and marketing-led events.

‘The events business is a combination of hospitality, creative and
technology,’ explains Morani. There is no formal way in which
this business could be studied. The structure you see in Table
8.1 is something that I created for my own understanding. It
EVENTS 399
seems as good a way as any to figure out the broad contours of

the business and what makes it tick. Essentially, there are two
elements to understanding the business—the types of events
and the value chain. These determine everything from cost and
profit to valuation.
The Types of Events

There are primarily three types of events:
Private
These are, as the word suggests, events that are hosted privately
and are not intended to make money. So, a wedding, a party,
a get-together are all events. Until now, we would never have
dreamt of asking professionals to organise these for us. Now,
however, as the scale of things changes—the glitter, status tag,
expense and headaches—there is a demand for professional
help. It started with high profile weddings in large business
families. It is now routine for even upper middle-class fami-
lies to employ wedding organisers. Some of these may actually
be one-man shows. Most large event management companies
prefer not to do personal events. If at all they are organised the
reason is to maintain client relationships. By their very nature,
private events remain the most unorganised part of the event
business.
Public
These include any event where a general audience, against a
focused or specifically targeted audience, is involved. These
are exhibitions, award ceremonies, fund raisers, sports events,
marathons and concerts, among other things. One of the most
profitable events, according to industry estimates, is the Filmfare
award ceremony. Wizcraft’s IIFA is estimated to have a top line of
roughly `120 to `130 million. Cineyug specialises in film shows,
either for other companies or its own. Many of these are crucial
programme drivers on television.
Corporate Events
These form the bulwark of the growth that the organised event in-
dustry is seeing. The usual corporate event could range between
`0.5 to `5 million in ticket size. Corporate events are by far the
steadiest revenue stream with a steady level of profit. For some of
the large event management firms, corporate events bring in over
70 per cent of their revenues and more than 80 per cent of profits.
These events signal the increasing importance of BTL spends in
the marketing mix.
Because of their nature, corporate events have seen the maxi-
mum specialisation and also M&A activity. For instance Kid-
stuff Promos, acquired by the Mudra Group in 2005, is strong
in brand promotions or activation work. About 60 per cent of
Encompass’s top line came from corporate events such as sales
meets, dealer conferences and so on. Another 30 per cent comes
from brand activation, taking the total from corporate events to
90 per cent.
Corporate events could be sub-classified into the following
three types:
Brand activation This roughly refers to any event which in-
volves getting in touch with the consumers—whether through
a loyalty programme, a demonstration, a contest, a promotion,
at a mall or a multiplex among dozens of other locations. The
idea is to ‘activate’ the brand, engage the consumer directly and
allow him to experience the brand through a contest or a dem-
onstration. The consumer ‘touch points’ could be anything—
multiplexes, malls, housing societies, parks, schools, colleges or
corporate houses.
‘Activation has taken over the brand,’ says Wadhwa of Kidstuff.
The firm started off offering promotions across 4–40 cities. Now
each major promotion is run across 400–600 cities and towns,
says he. It is, however, still an urban phenomenon. The opera-
tion is difficult because of the scale. It is more expensive because
the cost-per-contact or CPC is 20–25 per cent higher than mass
media.
Internal events Any event organised to meet the needs of an
internal audience—employees, dealers, retailers, vendors and so
on will fall under this category. Strategy workshops, sales meets,
EVENTS 401
dealer meets, motivational workshops, doctor conferences would

all form part of what are called internal events.
External events Any event organised to meet the need of
an audience that is external to an organisation—summits,
conferences, seminars, exhibitions, expositions (or expos)—
would be part of external corporate events. It sounds like public
events but external corporate events are different. The latter are
targeted at a well-defined audience. An investor summit is meant
for investors or a doctor conference for doctors and medical
practitioners. For instance, Petrotech, a large event organised
by ONGC twice every year, is reportedly a very profitable event.
The critical factor in external events is the event management
company’s relationship with trade bodies and government
organisations.
The Costs and Revenues

The ticket size of an event or its total budget could be anywhere
from `5,000 to `50 million. However the industry has very few
`10 million plus events, the bigger numbers are in the `2 to `4
million cluster. The other cluster is `1 million and below. The
margins are better here and most of the activation work falls in
this category. The margins could range from 2–30 per cent. Exhi-
bitions usually net margins of 20 per cent or so. ‘Unless you make
25–30 per cent operating margins, you cannot make money,’ says
Menezes flatly.
The Revenue Streams

Depending on the kind of event and the ticket size, there are usu-
ally three revenue streams for event management companies:
Advertising revenues Traditionally, these make up about 60–70
per cent and maybe more for most events. These are more rel-
evant for public events—say film and music shows.
Ticket sales These account for only 20–30 per cent of the rev-
enue of events. ‘Everybody wants a free ticket or an invitation to
an event,’ quips Tellis. In the overseas markets, however, ticket
sales form a bulk of the revenues especially for film-oriented

shows or concerts.
Retainer or fee This usually works for organising corporate
events. The fee could be a percentage of the ticket size, a flat fee
or a retainer. According to Abbas, a percentage share of the ticket
size works only for very large events, say with a total outlay of
`3 million or more. If the event is worth less than `3 million,
the time consumed is less so a flat fee works better. Another way
of charging is by the hour, like consultants or lawyers. However,
most clients are reluctant to pay on a time basis.
Television A fourth revenue stream emerging for event
companies is producing television content. Usually, event
companies are contracted to put together an event for a
television station—say, the Zee Cine Awards. Alternately, it sells
the rights of its own event to a station just as Wizcraft does with
its IIFA. Instead of doing that, Wizcraft puts together the event
and creates a show out of it and sells it to the station. Wizcraft,
Encompass and many other event firms have found that it makes
sense to get into the television production of reality shows. For
instance, Wizcraft put together Nach Baliye season 3and 4 for
Star, among other shows.
The Costs
The costs for event management firms depend on a number
of factors. In a corporate event, for instance, it depends on the
bells and whistles needed, on the artistes, and the objective of
the event. ‘Event management is all about customisation, there
is no rack rate. Therefore in an event of `50,000 to one worth
`10 million, the differences are huge, in lighting, sound, stage,
artistes and technology ...’ says Ignatius. The direct variable costs
are sound, light, video, and so on. There is a range of technical
options for which costs keep changing. Some of the major cost
heads are:
Technology and infrastructure These are stage setting, décor,
lighting, and infrastructure and could form 30 per cent of costs
Artistes This could form 20–25 per cent of costs.
EVENTS 403
Permissions or the cost of regulation Typically, permissions con-

stitute anywhere between 13–20 per cent of all costs for an event
management company.
Music licencing costs This is the royalty paid to music compa-
nies or collection societies for use of music at events. This could
form 3–5 per cent of costs.
The Value Chain

Given the types of events mentioned earlier, the value chain has
the following three players:
The Client
He defines everything; the kind of event, its scale, costs, nature of
fees, everything. It is a bit like advertising; a bad brief will get a bad
ad. The client could be an individual, a family, an industry asso-
ciation, government ministries, a company et al. While advertisers
want a national presence in the events business, they are more com-
fortable with a firm whose base is in the city they are doing the event
in. For instance, if Vodafone wants to do a brand promotion in a
shopping centre in Bhopal, it prefers to deal with a Bhopal-based
event company rather than Wizcraft or Showtime’s regional offices.
The Event Management Firm

The event company puts together the whole event. It may or may
not own the event—if it does, like Wizcraft owns IIFA—then the
client is the event company itself. However, a bulk of the events
organised in India are commissioned and the execution is done
by the event company.
The Advertisers and Sponsors

Sponsors usually finance various elements of the event—say air
tickets, hotel stay, clothes, and so on. When you read on a podium
that the airline partner is Jet Airways it means that Jet has paid for
the tickets of the speakers, performers and organisers of an event.

Advertisers usually take up space at the venue to advertise or buy
airtime on the televised version of an event. The nature of advertis-
ers differs according to the event. Some events may not have any ad-
vertisers—for instance private events, brand activation or internal
corporate events—are not meant to generate revenues for the client.
The Metrics
Earlier, the usual reaction within companies was: ‘Why an event
management company, couldn’t we do it on our own?’ Much of the
scepticism about the event management business stems from the
inability to measure what it brings to the table; clients are not sure
if they are being overcharged or getting value-for-money. Globally
too, measuring accurately what events bring is somewhat difficult.
The kind of metrics the business has or needs can be broken
up into the following:
The Metrics for Clients

The metrics clients would look at are:
Audience/Walk-ins or Ticket Sales

For public events like concerts or film awards, the audience size
and ticket sales could be a measure.
Cost per Contact

The most essential measure for many of the clients, especially the
ones using brand activation, will be on costs and audiences that
events bring versus other media. While a cost per touch or con-
tact is used, that is about all there is.
Internal Measures
For clients using events for internal purposes—say, a strategy
workshop or one on motivation—the impact on performance is
EVENTS 405
something that only the company can monitor internally. This can
be in the form of improved productivity of people or better revenues.
Rating Points
Since most events are meant for television these days, the ratings
an event gets also determines how much advertisers are willing
to spend on it in the future. So, the historical TVR becomes an
important metric for clients to sponsor it.18
Metrics for Measuring Business Efficiency

These are essentially the metrics that the event management com-
panies should be tracking to know how they are doing. These would
also be part of the main variables that determine the valuation of
event management companies and have been clubbed under ‘The
Valuations’ (from ‘Revenue to overhead ratio’ to ‘Contracts’).
The Regulations19
The Permissions
The nature and scope of events includes a vast range and vari-
ety of public events and private events from birthday parties and
weddings to sports extravaganzas. Since these are held in public
areas, municipal and local laws, regulations and rules come into
the picture.
Wherever public infrastructure is being utilised, various per-
missions of public bodies like the local municipal authority, the
police and so on are required. While it is impossible to give an ex-
haustive list of such regulations and how each varies from event
to event, and from town to town and state to state, an illustrative
list of the nature of permissions required would give some per-
spective of what may be required. Some of the permissions that
may be required are:
• A No Objection Certificate or NOC from the local town Col-

lector’s office or the equivalent district administrative head.
• An NOC from the local police, of which the Commission-

er of Police is the head in a city.
• An NOC from the fire department. Also information re-
lated to the layout of the event venue, location of fire fight-
ers and fire extinguishers are required to be furnished.
• Permission is needed from the traffic police for arrange-
ment on traffic movement to the event, particularly for
processions, public rallies, meetings, public campaigns,
film shootings, morchas and competitions.
• An NOC from the Works Department of the municipal
authorities for installing of electric generators.
• An NOC from the local municipal authority particularly
in cases where marquees, tents or coverings are being used.
• A liquor licence from the excise department if liquor is to
be served.
• For any stage performances, censor certificates may be re-
quired. For example, in Mumbai, one has to obtain it from
the Stage Performance Scrutiny Board, Government of
Maharashtra.
• A performance licence from the police.
• If a park needs to be booked for an event, then permission
from the Horticultural Department is required.
• If foreign artistes are performing then an additional NOC
is required from the Home Ministry Department of the
state government and all necessary documents like copies
of passports, visas, contracts, have to be submitted.
All municipal and police authorities have the right to prevent

any public nuisance from being caused. For instance section
397 of the Delhi Municipal Corporation Act of 1957 prohibits
nuisance in any public street or place, including any disturbance
by singing or using loudspeaker. Various other sections give
powers to the Commissioner of the Municipal Corporation of
Delhi to remove nuisance and grant licences for permitted use.
Similarly, the Delhi Police Act of 1978 empowers and enables the
Commissioner to make rules for regulating public events and
movement of people and vehicles, for preventing disorder. The
Act also provides for fines and punishment for those who fail to
obtain licences. The municipal authorities also enjoy the power
to impose taxes on such events.
EVENTS 407
The Copyright Licences

If a live performance involves use of any copyrighted music or if
there is use of any pre-recorded music, then licences need to be
obtained from the Copyright Societies. These are essentially col-
lecting societies set up by various categories or rights owners to
administer the rights collectively. The two main societies in India
which relate to the music industry are IPRS and PPL.20
The Valuation Norms

Since there have been about half a dozen deals where event com-
panies have sold out to large marketing groups, there is a lot of
material available on what works for the buyers. Typically, event
management firms in India are valued at 4–6 times EBITDA, says
Chatterjee.21 This could go to 10–13 times too.
The Variables
There are a number of factors that determine a good valuation
such as the following:
A Clean Balance Sheet

When Encompass was looking to hook up with a big marketing
services group the one thing that worked in its favour was its
clean balance sheet. Encompass was valued on its historical per-
formance, since it had no long term contracts or branded proper-
ties. The world’s second largest marketing services group, WPP,
bought a 60 per cent stake in Encompass in early 2008 taking it to
over 90 per cent after a few years (see Caselet 8a).
IPR or Branded Events

‘Wizcraft is the number one in events but its valuation comes
from IIFA,’ says Chatterjee. His point is that having an IPR or an
own-branded event is key to building a competitive advantage in
a market where entry barriers are pretty low. If a sports body or a

media company owns the rights to an event, it is, says Chatterjee,
in a better position to create properties. (See ‘The Shape of the
Business, Now’ for more details.) ‘The game in outdoor is acqui-
sitions, in events it is “building your brand”’, says Chatterjee.
Content
An event company that puts together great content for event af-
ter event makes more revenues and, therefore, gets a better valu-
ation. This is especially true for firms that organise corporate
events such as business seminars and investor summits where the
quality of speakers is crucial. That explains why events owned by
media companies get a better return from advertisers.
The Revenue Mix

Many large events contribute hugely to turnover, but are low on
profit contribution, so their wealth-creating capability is poor.
Encompass and Wizcraft make a bulk of their revenues from the
more steady corporate events.
Revenue to Overhead Ratio

This ratio indicates how efficiently an event company is spread-
ing its costs to generate more revenues out of the same rupee. In
2008, it was 6.7 times for Pico, one of the largest event compa-
nies in the world and based out of Thailand. This indicates a very
good use of the same overheads to generate additional revenues.
Revenue per Person

Since events—like software—is a people intensive business, this
is a good metric to measure business efficiency.
EVENTS 409
Revenue per Event

Again, because the nature of events, its ticket size and profitabil-
ity vary hugely, on an average what a company makes per event
too is a good measure of efficiency. Needless to say, this number
has to be tempered with profitability.
Contracts
The length of contract and renewability of contract is another
measure for robustness. For several large international players,
average contracts are for four years and more and renewability
could be as high as 80 per cent. In India, by contrast, most con-
tracts are only for a single event.
Table 8.1 The Shape of the Indian Events Business
The Event Management

The Event Formats The Possible Clients Firms The Advertisers
Private
Weddings Birthday parties Large scale personal Individuals, families Wizcraft Percept D’Mark Usually does nothave
celebrations advertisers
Public
Consumer exhibitions Award ceremonies (for Media, liquor, auto, Wizcraft Fountainhead Vodafone Standard
example, film, TV, banking, any type of awards) financial services, other Percept DNA Networks Chartered Manikchand
Concerts Marathons, sports events Games, film companies, music bands 360 Degrees RAMs Videocon Nokia ICICI
festivals, City festivals Fund raisers (for politicians, Cineyug Bank
causes or other things)
Corporate
Brand activation (for example, promotions, Telecom, FMCG, Encompass Wizcraft Usually doesn’t have
contests, demonstrations, direct marketing, Financialservices, Fountainhead Percept advertisers, the client is
loyalty programmes) Internal workshops (for auto, liquor and other D’Mark Showtime Kidstuff the only advertiser.
example, strategy, marketing, sales meets, companies Industry Promos Candid Marketing
dealer meets, doctor conferences) associations Governments Solutions DigitasReed
Trade bodies
External events (for example, summits, InformaEMap
conferences, seminars, expos) Trade
exhibitionsInvestor SummitsConventions
Source: Author.
Notes: 1. Reed and Informa are foreign majors in the BtoB events space. 2. The list of clients, event companies and advertisers is not exhaustive but indicative.
Analysis and compilation by Vanita Kohli-Khandekar. This chart may be reproduced only with due credit to either The Indian Media Business or Vanita
Kohli-Khandekar.
Caselet 8a The Encompass Story
Roshan Abbas was a mass communications graduate from

Jamia Milia University. As a student, he hosted radio shows,
anchoring TV programmes, compering fashion shows and
ghazal nights plus doing theatre in the mid-1990s. ‘Then,
event companies were not event companies, they were mid-
dlemen. There was a huge content gap for events and not
even 15–20 per cent of the need for content was being ser-
viced,’ says he. There was a lot of avoidance of live events by
clients, says Abbas. That is because, ‘In TV or print advertis-
ing the variables are controlled. In live events there are too
many variables that can’t be controlled,’ says Abbas.
In 1996, Rediffusion had put together a sales meet for
Singer. At this meet a 15-minute piece on change had to be
presented. Abbas cooked up the script, the singers, danc-
ers: ‘I ended up doing an event,’ he laughs. That led to other
shows and Abbas and his partner Sukrit Singh became de-
facto event managers for marketers looking for help with
promotions, sampling or other below-the-line action. Since
Abbas had hosted enough shows, he knew the disasters that
could occur and he avoided those. That is also the year Singh
and Abbas set up Encompass.
In 1997 Encompass did its first big show, the launch of
flexi-paging in India by Motorola. The bill for the event was
`2 million and Encompass was in business. After burning
their fingers with a couple of clients, Abbas and Singh decid-
ed that they did not want to be ‘abused vendors’ and that they
would focus only on corporate events. Both had successful
other careers—Abbas in television and radio and Singh in
theatre—so they could survive even if the events business
was not making money. When they did get an event, Abbas
usually ending up hosting the show free of cost for clients.
‘We were blessed with great clients—Colgate, Fuji, Opel,
Motorola, Gillette and so on. We were in fact an ad agency
which was doing all the live experiential marketing stuff
for them,’ says Abbas. There was no metric for what was a
(Caselet Contd.)
EVENTS 413
(Caselet Contd.)
successful event. In early 2001–02 there was buzz about the

big fat Indian wedding, but Encompass stayed away from it.
That is when the partners decided that Encompass’ philoso-
phy was to bring brands to life as experiences.
Since events were becoming programming drivers for
television, it made sense to get into television content too.
When KBC was being launched in 2000, Star Plus needed to
do on-the-ground promotions that help it get in touch with
audiences directly.22 Various ideas were floated, doing street
plays and road shows was one. However doing this across
10 cities on the same day with creative integrity and very
few variances was difficult. Also it wouldn’t create euphoria
or give a sense of the true scale of the show. The final idea
was to do a promotion across 10 cities and shower people
with `10 million in false notes with the announcement that
to make this `10 million real, they had to watch KBC. ‘The
idea was to let people experience money,’ says Abbas. That
is when, ‘we realised that we were getting into promotional
marketing,’ says Abbas.
He describes his time from 1996 to 2006 as his ‘live MBA’.
In 2008, WPP, the world’s second largest marketing services
group acquired a majority stake in Encompass and took this
up to 90 per cent soon. Though Abbas and Singh still own 10
per cent between them. Encompass is now aligned to JWT,
the ad firm which is a part of the WPP network in India.
Notes
1. The data on deals and many of the other details on size, growth et al are
sourced from The Business of Experiences, a report on the events and
activation industry released by EY in 2012. The report is based on interviews
the firm did with 32 CEOs in the events business.
2. Each report I came across carries parts of the events business clubbed with
something else. So, it is virtually impossible to calculate the total size of the
business globally.
3. Powar was earlier in senior positions at Wizcraft and Percept.
4. BTL essentially is any form of non-mass media communication, against
typical mass-media communication which is advertising, also referred to
as above-the-line or ATL. BTL includes among other things, events, public

relations, product design, direct marketing.
5. The global survey was conducted by The International Experiential Mar-
keting Association (see www.ixma.org) and its interactive newsgroup, The
Experiential Marketing Forum (see www. experientialforum.com). The
informal online survey polled members in 159 countries and sovereign
nations to determine the most successful experiential marketing tactics
implemented internationally, as well as the tactics that have the most po-
tential to negatively affect the brand experience. Fifty eight per cent of the
respondents said that a live brand experience is the single most powerful
experiential marketing tool (Experiential Marketing Forum 2007).
6. This is not rural India, but small-towns. Think of them as non-metro In-
dia or rest of urban India. These are towns with a population of anything
between 100,000 to under 4 million. Several marketers also include towns
with a population of 50,000 or more in this.
7. Informa’s overall group revenues in 2012 stood at £1.23 billion. However
the events business brought in £536 million. The remaining came from the
group’s academic, commercial and professional information businesses.
8. This, incidentally, is true for most businesses in India. By mature market
standards, our willingness to accept crazy deadlines and kill ourselves try-
ing to meet them is way higher.
9. Chatterjee was earlier head of 360 Degrees, BCCL’s events arm. He is cur-
rently head of brand and communications for the RPG Group.
10. Just like a film or a piece of music, the copyright or the right to have that
event under that brand name, say IIFA, belongs to Wizcraft. This therefore
creates an asset, much like a film or a piece of music which will be valued
as an asset.
11. Kidstuff Promos & Events was bought by Mudra in 2005.
12. IIFA is an annual film award function that Wizcraft created. It is held
outside of India every year and a chunk of Indian film personalities then
congregate at this venue. Amsterdam, Bangkok, Dubai, Yorkshire are some
of the cities where IIFA has been held.
13. These were among some of the most popular shows on Indian television.
14. Mohammed Morani is director of the Cineyug Group of companies. The
firm he formed with his family members.
15. It was sold to Mudra in 2005.
16. There are now more than 800 channels going by TRAI numbers in April
2013.
17. ENIL is a listed subsidiary of one of India’s largest media groups, The
Times Group.
18. TVR is Television rating for an event.
19. This section was put together by Anish Dayal, advocate, Supreme Court of
India and a specialist in media and entertainment law in 2008. There have
been no significant additions to it in this edition.
20. IPRS - Indian Performing Rights Society. PPL—Phonographic Perfor-
mance Limited. See Chapter 4 on Music for more details.
21. Earnings before interest, taxes, depreciation and amortisation.
22. The licenced Indian version of the game show ‘Who wants to be a Million-
aire’, on Star Plus, that became a huge hit.
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Index
Aaj Tak, 95 aggregator, rise of, 307–8, 319–20

above-the-line (ATL), 389, 413n4 Airtel, xxv, 319
ABP Limited, 2, 12, 24 Airtel’s Digital TV, 97
actors fees, 214 airtime, 113–14
Adalat, 99 Akash Bharati Bill of 1978, 116, 284
addressability, 91. See also Akashvani Bhavan, New Delhi, 79
Conditional Access System (CAS) Akhtar, Javed, 257–58
system Akhtar, Zoya, 257
Adex India, 283, 296 Alam Ara, 178
Adlabs, 169, 193, 195–96, 216 All India Radio (AIR), 4, 116–17,
Advanced Research Project Agency 263, 389
(ARPA), 312 declining of, 276–77
advertiser(s) in-house Audience Research Unit,
on media, xxxii 283
in print industry (top) origin of, 274–76
categorization of products, 49–50 alternative revenue system in Indian
companies in, 50–51 film industry, birth of, 187–92
on radio industry (top) Amar Ujala, 7, 56, 58
categorization of products, Amazon, 300
294–95 Ambani, Anil, 279
companies, 295–96 Amit Mitra Committee, 290
on television industry (top) A&M magazine, 25
categorization of products, AM mode, 279
141–42 Ananda Bazar Patrika (ABP), 18, 39
companies, 142–43 Andhra Patrika, 22
advertising Andhra Prabha, 22
cinema (see cinema advertising) Andhra Pradesh Film Chamber of
code, mandatory programme Commerce, 210
sharing for, 124–25 Ankhiyon Se Goli Maare, 190–91
correlation between GDP and, 5 Annanagar Times, 13
impact on MNCS, 25 Ansari, Tariq, 24
over-dependence on, 4 Antakshri, 394
rates, 112–13 Apple, 300
Advertising Agencies Association of Arbitron Inc, 384n13
India (AAAI), 70, 111 Arrival of a Train at Ciotat Station
The Age, 14 film, 175
Arunachal Pradesh Union of Bombay Talkies, 178

Working Journalists (APUWJ), 7 Bombay Times, 270
The Asiatic Mirror, 38 Borse, Vandana, 385n14
Asia Today Limited, 87 box-office gross, 205
Association of Indian Magazine Brahminical Magazine, 17
Publishers (AIM), 11–12 brand activation, 15, 400. See also
Association of Radio Operators of corporate events
India (AROI), 291 Brand Equity, 23
Atlantic, 308 brand extensions, 31–32
ATN, 242 Brazil, TV industry of, 68
Atomic Energy Act, 1962, 45 Brihanmumbai Municipal
ATS-6 Satellite, NASA, 81 Corporation, 385n15
Audience-FAX initiative, 37 British Broadcasting Corporation
Audit Bureau of Circulations (ABC), (BBC), 12, 80, 88, 272, 300
6, 20, 34, 36, 59 British imperialism, 17
Average Revenues Per User (ARPU), broadband
327 meaning of, 345n10
Axel Springer, 12 networks, xxiv
radio over, 268
Bachchan, Amitabh, 181–82, 185–86 Broadcast Audience Research Council
Balaji Telefilms, 99–100. See also (BARC), 70–71, 111–12, 155n7
Jeetendra; Kapoor, Ekta broadcasting industry, in India
Balakrishnan, Ajit, 313 broadcast business models, 101–2
Basu, Durga Das, 37 revenue system in
battle for scale, xxv–xxvi from mobile and internet, 104
BCCL, 4, 283, 353 through advertising, 102–3
buying of stakes in small and through overseas market, 103–4
medium companies, 8–9 Broadcasting Limited, 92
funds raising through IPO in 2006, Broadcasting Service Regulation Bill,
292 2006, 120
operating profits in 2011-12, 20 broadcasting technologies, 77–78
profit in 1987-88, 24 Broadcast Regulatory Authority of
below-the-line (BTL), 388–89, 413n4 India (BRAI), 120
Bengal Gazette, 15, 17. See also Broadcast Reproduction Right, 127
Hicky’s Gazette BSkyB, 103
B.G. Verghese Committee (1977), 284 BtoB magazine, 47–48
Bhansali, Sanjay Leela, 170 Buckingham, James Silk, 16
Bharat Sanchar Nigam Limited’s bulletin board system (BBS) piracy,
(BSNL), 97 251–52
Bhasmasur Mohini, 177 Buniyaad, 82, 99, 255. See also Joshi,
Bhatt, Mahesh, 160, 162 Manohar Shyam
Bhuj earthquake (2001), 159 Bureau of Indian Standard (BIS), 120
Big FM radio, 268, 270, 279 Burman, S.D., 236
big radio stations, 293–94 business
Bijli, Ajay, 223n10 of English newspapers publishing
Bloomberg, 268 issues in, 5
Bombay film world of 1940s, 224n25 metrics of, 32–34
INDEX 427
requirement of high capital Chitralekha, 63n39

investment for publishing, 20 Chitralekha, Gujarati magazine, 23
shape of, 4–5 Chitre, Nanabhai Govind, 176
way of working, 27–28 Chopra, Yash, 181
of films, 216–17 Chrome, 313
Business India, 25 The Chronicles of Narnia: The Lion,
business-to-consumer (BtoC) the Witch and the Wardrobe, 169
magazine, 47–48, 62n23 cinema advertising, 171–72
Business Today, 36 Cinematographic Act, 1952, 211–12
Businessworld magazine, 24 Cinemax India, 174. See also PVR
buying and selling function, Cinemax
challenge in recent years, 33 circulation, 34, 61n10
civil defamation, 338–39
Cable Act 2011, 97 Civil Defence Act, 1968, 45
Cable Act of 1995, 114, 118–19, 128, classified advertising, 321–22
130 Clear Channel, 353
Cable and Satellite Association of Close up Antakshri, 394
Asia (CASBAA), 71, 73, 155n12 clusters, in digital industry
cable networks in US, 155n13 earned digital media, 322
Cable News Network (CNN), 25, owned digital media, 320–21
86–87, 268, 300 paid digital media, 321–22
Cable Television Networks Code Division Multiple Access
(Regulation) Act, 1995, 93 (CDMA), 318, 346n30
cable TV industry, in India, 82–89, Code of Criminal Procedure, 1973,
184 41
crisis in 2002, 93 Colors channel, 61n11, 104
logjam in 2003, 94–95 colour transmission, beginning in
methods to get out of, 95–98 India, 81–82
Calcutta Journal, 16 Comcast, 103
calling party pays (CPP), 317 Communications Commission of
Canadian Broadcasting Corporation, India (CCI), 118
80 community radio stations (CRS),
Canadian Financial Institutional 271–72, 290
Investor (CPDQ), 291 compact discs (CDs), 31–32, 244
cassettes industry concert revenues, 232–33
emergence of, 237–38 conditional access system (CAS)
Gulshan Kumar and, 238–39 system, 91, 94, 96, 130
Cellular Mobile Telephone Service Confederation of Indian Industry
licence (CMTS), 158n61 (CII), 224n34, 297n3
Centre for Development of content creators, 320
Telematics (C-DOT), 316 content regulation, in films, 212–13
Chanda, A.K., 284 Convergence Bill, 117–18
Chanda, Pradeep, 240–41 Copyright Act, 1957, 41, 128
Chandni, 241 Copyright Amendment Act, 2012,
Channel V, 242 256–60
Chaurasia, Hari Prasad, 275 Copyright Enforcement Advisory
Chinai, Alisha, 241 Council (CEAC), 210
copyright(s) Department of Telecom (DoT),

of films, 207–9 316–17, 330, 332–33
licences, 407 Des Mein Nikla Hoga Chand, 99. See
corporate events, 400–401 also Irani, Aruna
Cosmopolitan, 12 devices, growth of, 311
cost per gross rating points Dhariya, Amol, 47–48
(CPGRPs), 115 ‘The Dhoni Effect’ report, by Ernst &
cost per mille (CPM), 64n57, 327 Young, 63n47
cost per thousand, 36–37, 64n57 digital addressable system, 97, 130
cost(s) digital devastation in America, case
incur in digital media, 323 study, 52–55
for radio station operation, 280 Digital Edge Report, 6
cover price cuts, in India, 5 digital media industry, Indian
criminal defamation, 339–40 cost of operation, 323
Customs Act, 1962, 44 market of, 337
Cybermedia, 32 metrics of
revenue metrics, 326–27
Dabangg, xxvii traffic metrics, 324–26
Dainik Bhaskar, 24, 56–57 opportunities and trends in
Dainik Jagran, 24, 27–28, 31, 56, 58, devices growth, 311
62n21 offline media, growth of, 309
Dalal Street Journal, 25 pay revenues, 308–9
Darr, 241 rise of aggregator, 307–8
Dataquest, 12 social media, growth of, 310–11
Dataquest, 25 video, growth of, 310
Davar, Maneck, 23 past of
DB Corporation, 4 internet, 311–15
DD Direct Plus, 93 telecommunications, 315–19
DD Metro, 92 regulations in, 327–34
Debonair, 23 revenue streams in, 322–23
Deccan Chronicle, 63n46 shape of business, 303–6, 336
Deccan Chronicle Holdings, 47 valuation norms, 334–35
defamation working of business
availability of principle defence clusters in, 320–22
against claim of, 339 value chain, 319–20
criminal (see criminal defamation) Digital Millennium Copyright Act of
definition of, 338 1998 (DMCA), US, 118, 258, 329
principle constituents of, 338 digital theatres, xxiv, 194–96
Defense Advanced Research Projects Digital Video Broadcasting–
Agency (DARPA), 312 Handheld (DVB–H), 77–78
360-degree solution, 385n20 digitisation
Delhi Beat, 30 changing patterns in digital
Delhi Times, 30 homes, implications of, 148–49
Delivery of Books and Newspapers of films, 171
(Public Library) Act, 1954, 45 implications of, 146–47
delivery, of television signals, 144 law, 130
DEN Networks, 67 meaning of, 144
INDEX 429
methods for, 145 non-renewal of HFCL-Nine’s

music, 230–31 contract in 2001, 92
viewing behaviour, 147–48 rating system of, 110
worry among customers and revenues in 2011-12, 93
service providers regarding, stronghold in rural areas, 93
144–45 telecast fees and commercial airtime
digitised cable system, 96–97 rates, increasing rate of, 82
Dil Chahta Hai, 166 transmitters coverage of, 80
Dilwale Dulhania Le Jayenge (DDLJ), Doordarshan Kendra, 80
188 downlinking guidelines, from India,
Director General of Foreign Trade, 122–23
211 dropping circulation of newspapers,
direct-to-home (DTH), xxiv, 70, 173 reports of, 2
broadcasting from 2001, 120 Drugs and Magic Remedies
operators of, 64, 73, 75 (Objectionable Advertisements)
pay per view services by, 78–79, Act, 1954, 45
174 Dutta, Sumantra, 349
revenues from, 68
DISH Network, 103 earned digital media, 322
Dish TV, 97. See also Essel Group Ebela newspaper, 2
Disney UTV, xxiv, 159–60, 163 EBITDA, 48
display advertising, 322 economics, of print industry
distribution cost, in newspapers and production costs of newspapers
magazines publication, 30–31 and magazines, 28–31
distribution, in India revenue generation, 31–32
platforms for, 104–5 The Economic Times, 9, 47
revenue streams for The Economist, 8, 308
by advertising, 106 Edison, Thomas, 174
carriage and placement Eenadu, 7, 22, 25
revenues, 106–7 Eenadu TV, 89
by subscription, 105–6 Ei Samay newspaper, 2
DNA, 58 ‘Ek do teen’ song, in Tezaab, 187
domestic co-production, in Indian Election Commission of India, 8
films, 197 Elphinstone Bioscope Company, 175
Don, 166 email advertising, 322
Doordarshan Audience Research EMap, 388
Television Ratings, 110 Emblems and Names (Prevention of
Doordarshan (DD), 23, 32, 34, 76, Improper Use) Act, 1950, 44
102, 114, 116, 389 Emergency in India (1975–77), 16,
competition over broadcasting 21, 39
rights, 124 end user piracy, definition of, 251
first satellite television experiments English and non-English
in 1975-76, 81 publications, gap between, 4
forex crisis in India, impact of, 88 English newspapers
government encouragement of challenges in front of, 3
satellite system, 81 circulation of, 3
Hum Log serial success, 81–82 online media impact on, 3
Entertainment Network India Facebook, 300, 303, 310

Limited (ENIL), 384n6, 414n14 Fairfax Media, 14
entertainment tax, 162, 214 Federal Communications
EY, 387–88 Commission (FCC), US, 70,
ESPN–Star Sport, 91 72–73, 98, 118, 297n10
Essel Group, 97, 133 Federal Networking Council (FNC),
ETC, 242 313, 345n21
ETV Marathi, 103 Femina, 31
Evening News, 22. See also Times of FICCI-Frames conference Chennai
India (TOI) (2009), 162, 222–23n7
Event and Entertainment FICCI-KPMG report (2013), 11,
Management Association of India 62n21, 162, 168, 170, 230, 233,
(EEMA), 387 351
events industry, Indian file transfer protocol (FTP), 311
below-the-line (BTL) investments Filmfare Awards, 47
in, 388–89 film industry, Indian
case study, 412–13 alternative revenue streams, birth
cost and revenues of, 401–3 of, 187–92
growth of, 387, 396–98 big guys in films retail business,
metrics of 219
for clients, 404–5 birth and evolution of, 176–77
for measuring business break-up of studio system, 179–80
efficiency, 405 impact felt in 1970s and 1980s,
past of, 394–96 180–85
regulations in, 405–7 changing eco-system (2006–2009)
shape of business, 410–11 changing trends in marketing of
availability of technology, 392 films, 198–99
bureaucracy and taxes, 392–93 production of films, 197–98
business fragmentation, 390 changing trends in
crunch of new talent, 391 retail consolidation, 174
issues in business, 389–90 rise in cinema advertising,
lack of infrastructure, 391–92 171–74
pressure cooker business, content regulation, 212–13
390–91 difference between other films
types of events industry and, 219–20
corporate events, 400–401 diversification of revenues, 220
private events, 399 emergence of new talent, 159–60
public events, 399 financing and taxation process
valuation norms of, 407–9 entertainment tax, 214
value chain, 403–4 fee to actors, 214–15
way forward, 393–94 foreign investment, 213
working of business, 398–99 right to use copyright in film,
Experiential Marketing Forum, 213
414n5 VAT on film distribution, 214
The Express Group, 34 foreign films, import of, 211–12
external events, 401. See also fun of 1940s, 178–79
corporate events new beginning in 1990s, 185–87
INDEX 431
new film industry (2002–2006), Foreign Exchange Regulation Act

birth of (FERA), 260n11
cleaning up finances, 192–94 foreign films, import of, 211–12
revolution in retail business, foreign institutional money (FII),
193–97 61n4
other laws and regulations in, foreign publishers, entry into India,
215–16 12
products use in, history of, 221–22 forex crisis in 1991, India, 88–89
regulations in formula, emergence in Indian film
copyrights in cinematographic industry, 182–83
film, 207–9 Fortune India, 2, 12
history of, 206–7 Fox Star Studios, 170
piracy problem, 210–11 free commercial time (FCT), 102
rights and piracy, 207 Freedom of the Press, 39–41
revenue generation, increase in, 160 free publications, 13–14
shape of, 218
shape of business Gada, Hiren, 319
issues in, 161–66 Galactic Network, 312
opportunities, 166–71 Gandhi, Indira, 21, 284
studio years, 177–78 Gandhi, Rajiv, 316
valuation norms in Gangs of Wasseypur, 170
variables used for, 216–18 general entertainment channels
working of business (GECs), 75
metrics in film business, 204–5 George P. Johnson, event company,
value chain, 200–204 388
film music, 246–47 Ghai, Subhash, 186
FIPP, 12 Ghose, Bhaskar, 79
First City, 30 Global Mobile Personal
FM broadcasts, 279 Communications Services
FM mode, 279 (GMPCS), 347n42
FM radio, 77, 229, 264, 285–86 Global System for Mobile
origin of Communication (GSM), 110,
phase one policy, 285 346n30
phase three of privatisation, 2G networks, 77
288–90 Google, 300, 303, 319
phase two of privatisation, GQ magazine, 12
285–88 Gramco, 234–42, 244, 260n11
Forbes India, 2, 12 Gramophone Company of India
foreign direct investment (FDI), (GCI), 240, 260n10
298n29 Guha, Pradeep, 4
in film industry, 213 Gujarat riots (2002), 159
in print media, 2, 26–27 Gupta, Sanjay, 13
relaxation on DTH by MIB, 131 Gutenberg Bible, 16
restrictions on foreign
companies, 42–44 Haasan, Kamal, 78, 162, 173
in radio industry, 289 Hansa Research, on Indian
in telecom industry, 333–34 newspapers, 1
Hathway cable, 67, 90 Indian Broadcasting Company (IBC),

Hawa Mahal, 281 273–74
HBO, 102 Indian Broadcasting Foundation
HD radio, 268–69 (IBF), 69–71, 111, 127, 345n12
Headend in the sky (HITS), 129–30 Indian Copyright Act 1957, 40, 207,
Health & Nutrition magazine, 25 237
HFCL-Nine Broadcasting, 92 Indian Express, 18, 22
Hicky, James Augustus, 15 Indian Listenership Track (ILT), 283
Hicky’s Gazette, 15–16 Indian Market Research Bureau
high-profile subscription schemes, 31 (IMRB), 11–12, 33–34, 108
Himachal Futuristic Indian Music Industries Association
Communications Ltd, 92 (IMI), 229, 240, 244
Hindi Indian National Satellite (INSAT)
FICCI-KPMG 2013 report on, 11 programmes, 81
newspapers as rising power, case Indian Newspaper Society (INS),
study, 56–58 345n12
The Hindu, 35 Indian Penal Code, 1860, 38
Hindustan, 7, 56, 58 Indian Performing Rights Society
Hindustan Times (HT), 4, 25, 33 (IPRS), 210, 229, 252–53, 414n20
Hindustan Unilever Limited (HUL), Indian Phonographic Industries
33 Association (IPIA), 239
HMV, music company, 184 Indian Post Office Act, 1898, 44
hoardings, in Kanpur to local edition, Indian Press Act, 1910, 39
15 Indian Press (Emergency Powers)
Hollywood industry, 160–61 Act, 1931, 39
in India, 170–71 Indian Radio Times magazine, 273–74
home-delivery model, 2 Indian Readership Survey (IRS), on
Homeindia.com, 314 Indian newspapers, 1, 3, 9, 63n48
Home TV, 89 Indian Society of Advertisers (ISA),
home video, 196–97, 246 70, 111
Household Premiumness Index Indian Space Research Organisation’s
(HPI), 35–36, 63n55 (ISRO), 73–74
HT Media, 47 Indian Telegraph Act of 1885, 116
Hum, 187 Indiatimes, 304
Hum Aapke Hain Kaun, 188 India Today, 23, 36, 47
Hum Log, 81–82, 156n19 The India Today Group, 12
Hungama company, 304, 319–20 India Today Plus, 36
hyperlocal approach, 13 IndiaWorld.com, 313
Industrial Development Bank of
IBN 7, 95 India (IDBI), 193
3 Idiots, 169, 194, 220, 231 iNext, 13
IIFA awards, 414n12 Infomedia, 47
InCable, 67, 90, 156n26 Information Technology Act, 2000,
Indecent Representation of Women 328–30
(Prohibition) Act, 1986, 41 Information Technology
The Independent, 14 (Intermediaries guidelines) Rules,
India Gazette, 16 2011, 329
INDEX 433
Inox Leisure, 160, 174 Jeetendra, 99

Insat satellite system, of ISRO, 73 Jeffrey, Robin, 22
integrated reach among readers, 37 Jhunjhunwala, Rakesh, 292
intellectual property rights (IPR), 393 Joggers Park, 252
internal events, 400–401. See also ‘John Doe’ orders, 210–11
corporate events Jolly LLB, 170
international co-production, of films, Joshi, Manohar Shyam, 99
197 Judwaa, 166
International Experiential Marketing JWT, 387
Association (IXMA), 414n5
International Federation of the Kagti, Reema, 257–58
Phonographic Industry (IFPI), Kahanii, 170
227, 230, 248, 260n1 Kahanii Ghar Ghar Kii, 78
internet, 311–15 Kai Po Che, 159–60
broadcasting revenue from, 104 Kaliya Mardan, 177
business, 297n17 Kal Radio (Suryan), 279
definition of, 345–46n21 Kangan, 99
generation of revenue by Kapadia, Bharat, 23
newspapers and magazines Kapoor, Ekta, 99
through, 32 Kapoor, Raj, 181, 183
marketing of films through, 199 Kapoor, Shekhar, 160
piracy, 251–52 Kasturi & Sons (publisher of The
radio, 245–46, 297n14 Hindu), 4
user in India, 10 Katha Sagar, 82
vs TV, 10, 76 Katial, Tarun, 270
Internet and Mobile Association of Kaun Banega Crorepati (KBC), 101
India (IAMAI), 345n7 Kerry Packer’s Publishing, 92
Internet Explorer, 313 Keskar, B.V., 276
Internet relay chat (IRC), 311 Khalnayak, 186
internet service providers (ISPs), 97, Khandaan, 82
129, 231, 312, 320 Khanna, Rajesh, 182, 186
investment, in media and Khan, Ustad Bismillah, 275
entertainment business, xxxiii Khote, Durga, 275
IPTV, 74–76, 95, 128–29, 254 Khuda Gawah, 186–87
Irani, Aruna, 99 Kinema (Bombay), film magazine,
iRock Media, 223n14 177
IT Act Amendments (2008), 329–30 Kinetograph, 174. See also Edison,
Thomas
Jagran, 2, 4. See also Mid-Day Koffee with Karan, 132
Jagran Pakashan, 47, 62n21, 353 Kohli, Jagjit, 83–84
Jain, Rajesh, 313 Komli, 304
Jain, Samir, 24–25 Kora Kaagaz, 99
Jain, Siddharth, 165 Krishi Darshan, 80
Janata government, transformation of Krishnan, G., 24
publishing industry during regime Ku-Band transponder, 73, 120
of, 21–22, 39 Kuch Kuch Hota Hai, 188, 191
JCDecaux, 353, 384n7 Kumar, Ashok, 82, 178, 210–11
Kumar, Gulshan, 238–39 Masoom, 160

Kumar, Hemant, 236 Massachusetts Institute of
Kumar, Kishore, 240 Technology (MIT), 312
Kyunkii Saas Bhi Kabhi Bahu Thi, 78 Mathew, Cyriac, 23
Mathew, Mammen, 17, 24, 62n28
Lagaan, 188, 255 media and entertainment (M&E)
Lakshya, 166 business, Indian, xxiii, xxiv, xxxiv
language cinema, rise, 198 Media and Entertainment Skill
language newspapers, 11 Council (MESC), 166
language press in India, history of, 22 Media Forward Link Only (Media
Leaving the Factory film, 175 FLO), US, 78
libel, 337–38 media, Indian
liberalisation, impact on advertising spend on, xxxii
telecommunication industry, 316 and entertainment landscape, xxxi
Licklider, J.C.R., 312 groups in India, leading, xxxiii–
Linkedin, 310 xxxiv
little islands, of media, xxvi–xxvii growth in, xxx
live music, 232–33 managers argument over
Living Media, 25 newspapers, 8
localisation of radio, 269–70 planner’s, 114–15
local newspapers, 13 regulations in, xxxv–xxxviii
Lok Sabha, 7 Media Research Users Council
Ludhianvi, Sahir, 236 (MRUC), 6, 35–36, 59, 111
Mehta, Sanjay, 314
Madras Presidency Radio Club, 273 merchandising of films, 199
Magazine Advertising Bureau, 5 Merchant, Katy, 34
magazine publishing industry, 23 mergers and acquisitions (M&A),
vs news papers, 28 2, 48
Mahanagar Telephone Nigam Metcalfe’s Act, 38
Limited (MTNL), 97, 316 Metro, 13
Maharashtra Cable Sena, 91 Mid-Day, 2, 22, 61n6, 277
Mail Today, 14 Mid-Day Multimedia, 23–24, 47
Maine Pyar Kiya, 241 Mindworks Global Media Services, 10
The Malayala Manorama, 17–18, 28, Ministry of Information and
62n28 Broadcasting (MIB), 38, 81, 122,
Malhotra, Shyam, 32 125, 131, 284, 290
Manchester Evening News, 14 Mint, 14
Mangeshkar, Lata, 236 Mirut-Ul-Akhbar (Mirror of News), 17
Manto, Saadat Hasan, 224n25 mobile advertising, 322
Map method, birth and death of, 110 mobiles
Maran, Kalanithi, 102, 279 broadcasting revenue from, 104
market cost, in newspapers and generation of revenue by
magazines publication, 29–30 newspapers and magazines
marketing of films through, 32
co-branding of, 199 marketing of films through, 199
internet and mobile use for, 199 television, 130
rising costs of, 198–99 TV, 74, 76–78
INDEX 435
Modi Ke Matwale Rahi, 281 growth of, 227

Mohabbatein, 188 new revenue streams, rise of
Momin, Shabiir, 307 by home video, 246
Morani, Mohammed, 414n14 by internet and mobile, 245
Mosaic, web-browser, 313 by radio and TV, 245
Motion Picture Association of by satellite radio, streaming
America (MPAA), 223n18 services, internet radio, 245–46
movable type press in 1455, 16. See opportunities and trends in
also Gutenberg Bible live music/concert revenues,
Movie Mirror (Madras), film 232–33
magazine, 177 outsourcing of music
moving picture experts group operations, 232
(MPEG 2) technology, 73–74 past of
Mozilla Firefox, 313 backdrop of, 234–35
Mr aur Mrs Khanna, 173 Gramco (HMV) years, 235–36
MTV, 88, 242 regulations in
Mudra Institute of Communications, backdrop of, 248
Ahmedabad (MICA), 271 copyright societies, 252–54
Mujshe Shaadi Karogi, 166 rights and piracy, 248–52
Mukta-Adlabs, 97 satellite TV (see satellite TV)
Mukta Arts, 191, 195, 216 shape of, 255
multinational corporations (MNCs), shape of business, 228–31
25 shifts in Indian markets
multiplexes, xxiv, 193–94 cassettes emergence in
Multi Screen Media, 89. See also Sony international market, 236–38
Entertainment TV smartphones impact on, 228
multi-system operators (MSOs), 97, valuation norms
156n25 backdrop, 254
arguments for pay, 90–91 variables in music business,
origin of, 89–90 254–55
Mumbai Mirror, 30, 282 working of business
Mumbai Samachar, 17–18 catalogue use, 247–48
Mumbai Times, 30 film music, 246–47
Murali, N., 4 non-film music, 247
Murdoch, Rupert, 88–89 portfolio approach, 247
Music Broadcast Private Limited’s MW broadcasts, 279
(MBPL’s), 292 My name is Khan, 170
Music Broadcast Rights, 257
music channels Nadiadwala, Sajid, 166
rise of, 242–43 Nai Dunia, 56
music industry, Indian National Aeronautics and Space
changes in Administration (NASA), 81
decrease in royalities, 229–30 National Cable and
music digitisation, legalisation Telecommunications Association
of, 230–31 (NCTA), 70, 72
transformation in copyright National Center for Supercomputer
act, 230 Applications (NCSA), US, 313
National Film Development New Telecom Policy (1999), 317–18

Corporation (NFDC), 182 The New York Times, 8, 308
National Readership Survey (NRS), niche magazines, 11–13
224n29 Nielsen/Net Ratings, 37
in 1974, 34 Nigam, Sonu, 241
in 1981, 35 non-film music, 247
National Security Act, 1980, 45 Norm on Journalistic Conduct
National Skill Development policy, in 2010, 46, 328. See also Press
166 Council of India (PCI)
National Telecom Policy 2012, NTL, 103
330–34 Nukkad, 82
Naushad, 236, 275
Navbharat Times, 47 Official Secrets Act, 1889 and 1923,
NDTV, 268 39, 44
filed lawsuit against Nielsen offline media, growth of, 309
Holdings in 2012, 69 old media, 299
NDTV Good Times, 30 Om Namah Shivay, 99
NDTV India, 95 Om Shanti Om, 199
Nehru, Pandit Jawaharlal, 21 One Segment Broadcasting (OSB),
net users, 61n17 Japan, 78
Network18 TV, 67 online media, 1
new Indian film industry (2002– online world, 151–54
2006), birth of, 192–97 OnMobile, 304, 319
News Broadcasters Association open general licence (OGL) for
(NBA), 69, 71, 127 newsprint and printing, post-
news broadcasting business, fixation liberalisation, 24–25, 63n42
of, 149–51 ORG–MARG report, 34
News Outdoor India (NOI), 349–50 Outdoor Advertising Association of
Newspaper Advertising Bureau, 5 America (OAAA), 350
Newspaper Association of America outdoor media market
(NAA), 6, 37 in India, 351
newspaper industry, in India, 1 world reaction towards, 383–84
during 1950s, 18–20 Outlook, 31, 47
from 1960s and 1970s, 20 The Outlook Group, 12
FDI in, 26–27 out-of-home (OOH) media industry,
growth, change and languages, Indian, 349
21–23 case history, 376
growth of, 15–17 global market scenario, 368–69
pre-independence years, 17–18 Indian market scenario, 369–70
vs magazines, 28 market of, 351–53
Newspaper (Price and Page) Act of metrics of, 368
1956, 40 past of
Newspapers (Incitement to Offences) growth of business, 359–60
Act, 1908, 39 Indian years, 357–59
Newspapers (Price and Page) Act, 18 international past, 356–57
Newsprint Control Order of 1962, 20 possible metrics
Newstrack magazine, 85 cost per thousand, 372
INDEX 437
display period, 371–72 piracy, 127–28

people traffic, 370 of films, 207, 210–11
time and distance for of music, 251–52
commuting, 371 Pitroda, Sam, 93, 316
time spent out of home, 371 platforms, meaning of, 345n11
vehicular traffic, 371 podcasting, 269
regulations in, 372–73 Police (Incitement to Disaffection)
Delhi policy, 373–75 Act, 1922, 45
international lessons, 375–76 Prabhat Khabar, 56
shape of business, 353–56, 380–82 Prasar Bharati Bill (1979 and 1989),
valuation norms, 377–79 116, 284
working of business Prasar Bharati (Broadcasting
influencing variables, 360–64 Corporation of India) Act, 1990,
value chain, 364–68 116
outsourcing of ad production, to Prasar Bharati Corporation, 76,
agencies, 10–11 93, 116, 124, 284. See also
Overseas Corporate Bodies (OCBs), Doordarshan (DD)
120 Premchand, Munshi, 179
overseas market, of Indian films, pre-press production, of newspaper
168–69 and magazines, 61n18
owned digital media, 320–21 Press and Registration of Books Act,
1867 and 1876, 38, 44
paid digital media, 321–22 Press Commission’s report (1953),
Pandora, internet radio service in First, 18–19
US, 267 Press Council Act, 1978, 46
Pardes, 188 Press Council of India (PCI), 7, 21,
Parekh, Asha, 99 46, 328
Pather Panchali, 183. See also Ray, Press Institute of India, New Delhi,
Satyajit 62n35
Pathfinder Publishing, 12 Press Laws Enquiry Committee, 39
pay channels, 93 Prevention of Insults to National
pay per view, 78–79 Honour Act, 1971, 44
Peepli Live, xxvii, 159 Price per Viewing Hour (PPVH),
peer-to-peer (P2P) distribution 72. See also National Cable and
services, 76 Telecommunications Association
PEM software, 33 (NCTA)
people cost, in newspapers and print industry, in India
magazines publication, 29–30 daily time spent on reading,
Performing Rights Society, London, declining of, 9
273 growth of, 1
Peri, Maheshwar, 12 lack of unit among, 5–6
Phadnis, Atul, 70 present business scenario, 5–9
Phalke, Dhundiraj Govind, 176–77 regulations in
Phonographic Performance Limited history of, 37–38
(PPL), 210, 229, 253–54 Indian Penal Code, 1860, 38
Photoplay (Calcutta), film magazine, Press and Registration of Books
177 Act, 1867 (see Press and
Registration of Books Act, Radio Audience Measurement

1867) (RAM), 283–84
Vernacular Press Act, 1878 (see Radio City, 270, 279, 292
Vernacular Press Act, 1878) Radio Club of Bombay, 273
restrictions imposed on radio industry, Indian
debarred foreign companies advertising, increase in, 263
from launching Indian print All India Radio (AIR) (see All
editions, 42–44 India Radio [AIR])
other types, 44–46 economics of
Right to Privacy, 41 cost of operating radio station,
scenario of, 51–52 280–81
trends, opportunities and growth entry of radio in India, 273–74
areas, 10–15 FM beginning, 285–90
Pritish Nandy Communications, 216 growth of, 263–64
private equity, 2 metrics of
private events, 399 buying and selling dynamics,
private television broadcasting, xxiii 281–82, 281–84
Prize Chits and Money Circulations changing patterns in radio
Schemes (Banning) Act, 1978, 45 advertising, 282–83
Prize Competitions Act, 1955, 45 measures available, 283–84
production glut, in 2010, 164–65 regulations in
production/printing cost, of beginning of FM, 285–90
newspapers and magazines, 29 community radio, 290
programme code, 123 history of, 284
protectionism, in Indian film satellite radio, 290–91
industry, 162–63 second life to, 277–79
Protection of Civil Rights Act, 1955, shape of business
46 third phase of licensing, 265–66
publications, in economies, 2 training for radio professionals,
public events, 399 266–67
Public Mobile Radio, Trunked trends and opportunities in
Services (PMRTS), 347n42 community radio, 271–72
public service broadcasters (PSBs), content localisation, 270
80–81 distribution platforms, 267–69
Pundalik, religious film, 176 encouragement to local
Punjab Kesari, 7 advertisers, 270–71
Purohit, Apurva, 32–33, 282 localisation of radio, 269–70
PVR Cinemax, xxiv, 76, 160, 164, visual radio, 272
174, 216 valuation norms
backdrop, 291–92
Quickr, 304 variables in, 292–94
working of business, 279–81
Raddi, 13–14 Radio Mirchi, 270, 279, 282, 291
Radhakrishnan, 83 radio programme listenership (RPL)
Radio Advertising Bureau, US ratings, 283
website, 297n4 Radio Sangeet Sammelan, 276
radio advertising revenues, 297n20 radio signals, 297n9
INDEX 439
Rafi, Mohammad, 236 rights

Rai, Gulshan, 181 of films, 207
Raja Harishchandra, 176. See also of music, 249
Phalke, Dhundiraj Govind Right to Privacy, 41
Rajasthan Patrika, 56 Roberts, Julia, 182
Rajnikanth, 162 Robot, 162
Rajshri TV, 76 Rob Report, German publisher, 12
Ram, Gita, 33 Roy-Kapur, Siddharth, 163–64, 223n10
Ram Lakhan, 241 Roy, Raja Rammohun, 16
Rangarajan, Sinduja, 61n11 RPG Cable, 90
Ra.One, 199 RPG Netcom, 156n26
Rao, Ramoji, 22
rating system, in television industry, Saaransh, 160
107–12 Saat Phere, 131–32
Ratnam, Mani, 188 Saawariya, 170
Ray, Satyajit, 183 Saigal, K.L., 236, 240
reach among readers, 36 Sakshi, 7
reach, of media, xxviii–xxix sales decline, in UK and US, 2
Reader’s Digest, 31 Sambad Kaumudi, 16–17, 62n27
readership, 34–36 Sampath, Ram, 256–58
survey in India, case study, 59–60 Sandesh company, 47
Readership Studies Council of India Sarabhai v/s Sarabhai, 132
(RSCI), 36, 59 Saregama, music company, 184, 234,
recent reading method, 35 247, 273. See also Gramco
Reddy, K. Sreenivas, 7 satellite
Red FM, 229 radio, 245–46, 268, 290–91
Rediff.com, 313 TV, 25, 32, 86, 242–45
Reed Elsevier, 388 Satellite-Digital Multimedia
Reed, Peter, 16 Broadcasting (S-DMB), Korea, 78
Registrar of Newspapers for India Satellite Instructional Television
(RNI), 20–21, 44 Experiment (SITE), 81
Reliance Big Entertainment, 193 The Saturday Times, 23
Reliance Broadcast Network, 279 Saudagar, 241
Reliance Communications, 318 Savvy, 23
Representation of Peoples Act, 1951, Scarborough Research, 37
7–8, 45 Screwvala, Ronnie, 83, 156n20
re-publication of content, 340–41 service tax, exemption for cineman
reseller piracy, 251 broadcasters, 215
Reserve Bank of India (RBI), 21, 88 set-top boxes (STB), 93, 95
retail Shah, Niren, 304
consolidation on, 174 Shah, Yogesh, 83
revolution in film industry, 193–97 Shankar, Ravi, 275
return on capital employed (ROCE), Shemaroo, casette company, 76, 309
48 Sholay, 99, 160
revenue sources Shoppers’ Stop, 199
in digital industry, 322–23 Show Theme, 81, 156n19
in radio industry, 280–81 Shree Ganesh, 99
Sidhwani, Ritesh, 166 tabloids, 14–15

Singham, 167 Taj Television, 225n53
Singh, Malkiat, 241 Talaash, 256
Singh, Manju, 81 talent crunch, 165–66
Sinha, Pramath Raj, 61n13 Tamil Film Producers Council
SiriusXM radio service, 268 (TFPC), 163
S.K. Patil Committee Report (1951), Tata DoCoMo, 311
185 Tata Sky, 97, 174
small films, 198 Telecom Disputes and Settlement
small radio stations, 293–94 Tribunal (TDSAT), 72, 155n9, 288
smartphones, 1, 228 telecommunications
social media, 1, 310–11, 337–38, definition of, 315
340–44 emergence of, 315
social media advertising, 322 in India, 315–16
Society, 23 liberalisation impact on, 316
software industry, 98–99 Telecom Regulatory Authority of
revenue systems, 100–101 India Act, 1997, 347n39
Sony Entertainment TV, 67, 89 Telecom Regulatory Authority of
Sony Music, 188 India (TRAI), 69–72, 330
South Asia FM, 279, 292 broadcast regulator in 2004, 119
South Indian Music Companies consultation paper
Association (SIMCA), 229 on advertising, 114
Spenta Multimedia, 23 on satellite radio services, 290
Srivastava, Siddharth, 83 data on radio business, 297n19
Stardust, 23 on digitisation of cable system, 96
Star Gold, 102 guidelines for telecom companies
Star Movies, 89 on VAS activation, 308
Star News, 95, 102 paper on mobile broadcasting, 77
Star Plus, 30, 99, 102 recommendations on IPTV in
stars in Indian films, dependence 2008, 128–29
on, 164 regulations on operations of
star system, 182–83 telecom services providers, 333
Star TV, 25, 67, 87–88, 92, 120 telegraph network in India,
State Trading Corporation, 20 establishment of, 315
streaming services, 245–46 television and online world in
Stroeer, 353 America, case study, 151–54
studio system, in India, 177–80 Television Audience Measurement
Subramanyan, Shobha, 24–25 (TAM), 68–70, 80
Sunday, 23 coverage of, 110
The Sunday Review, 23 method of working, 109–10
Sun Direct, 97 number of TV at Indian homes,
Sun TV, 67, 88, 102, 282 137, 155n4
Super Cassettes, 241, 245 origin of, 108–9
The Sydney Morning Herald, 14 television broadcasting industry, in
syndication process, 41, 78 India
business, working of, 98
Taal, 188 current status of
tablet, 1, 10 content regulation, 125–27
INDEX 441
Headend in the sky (HITS) (see ticket(s)

Headend in the sky [HITS]) average prices of Indian films
method to regulate piracy average, 205
problem, 127–28 sales in US, xxiv
new distribution platforms, Timbre Media, 268
128–30 Time Out, 30, 62n21
efficiency metrics, 114–15 The Times, 14
cost per gross rating points Times Group, 2
(CPGRPs), 115 Times of India (TOI), 5, 9, 17, 20, 22,
effective rate, 115 28, 175, 277
growth of, 67, 79–80, 89, 135–36 time spent
programming geners, 139–40 on media, xxviii–xxix
multi-system operators (MSOs) on print vs reach, xxx
(see multi-system operators on TV vs reach, xxxi
[MSOs]) Time Warner, 103
operating margins for Indian Tipnis, P.R., 176
broadcasters, 68 Torney, Ram Chandra Gopal, 176
opportunities and trends, 74–78 trademark/trade name infringement,
programming opportunities, 79 252
regulations in traditional mobile networks,
Convergence Bill (see 76–77
Convergence Bill) Transmission Control Protocol
guidelines for uplinking and (TCP), 313
downlinking, 121–23 TRP, 107–8
history of, 116 T-Series, 76, 239. See also Kumar,
origin of, 116–17 Gulshan
Supreme Court judgment T-Series Public Performance License
impact on, 117 (TPPL), 253–54
revenue opportunities, 78–79 TVS Saregama, 394
shape of business TV Today Network, 24
issues in, 69–74 Twentieth Century Fox (News
software industry, 98–101 Corporation), 170
valuation norms, 131–34 Twitter, 310
vs world industry, 137–38
television, meaning of, 155n1 Udayam, 22
television rating targets (TVR), 103, UFO Moviez, 384n8
107, 414n18 United Access Service Licence
Telugu film industry, 161–62, 218 (UASL), 332, 158n61
Ten Sports, 225n53 United Cable Network (UCN), 90
Terrestrial-Digital Multimedia Unix User Network (USENET),
Broadcasting (T-DMB), Korea, 311
78 Unlawful Activities (Prevention) Act,
Thakurta, Paranjoy Guha, 7 1967, 46
The Hindu, 4 uplinking
third generation (3G) mobile guidelines from India, 121–22
telecommunications networks, meaning of, 158n55
76 USA Today, 4
Tibrewala, Haresh, 313 U.S. Department of Defense, 312
value-added-services (VAS) industry, Win Cable, 156n20

in India, 304, 308 Wire and Wireless Limited (WWIL),
VAT, on film distribution, 214 90, 133
Vernacular Press Act, 1878, 38–39 The Wireless Telegraphy Act of 1933,
Viacom18 Media, 61n11, 170 116
Vicky Donor, 159 Wizcraft, 387, 393–94
video cassette recorder (VCR), 83 Working Journalists and other
video, growth of, 310 Newspaper Employee (Conditions
Videsh Sanchar Nigam Limited of Service and Miscellaneous
(VSNL), 12, 313, 316, 346n22 Provisions) Act, 1955, 45
Vidyalankar Committee (1966), 284 WorldSpace India, 268
Virgin Radio, 269, 297n13
Vishwaroopam, 78–79, 173, 223n22. Yaadein, 188, 192, 244
See also Haasan, Kamal Yahoo, 305
visual radio, 272 Yash Raj Films, 192–93
Vividh Bharti, 276, 281. See also All Yesterday Listenership (YDL), 283
India Radio (AIR) Young Persons (Harmful
Vodafone, 319 Publications) Act, 1956, 45
voluntary retirement scheme, in YouTube, 76, 319
Gramco, 240. See also Chanda,
Pradeep Zee Cafe, 103
Zee Cinema, 103
The Wall Street Journal, 8 Zee Marathi, 103
Walt Disney, 222n1, 314 Zee Music, 242
Warner Brothers, 164–65 Zee News, 103
Washington Post, 8 Zee TV, 25, 30, 63n50, 67, 87–88, 92,
Welby, B. Messink, 16 103
Who Wants to be a Millionaire, 113, Zenga TV operator, 77, 307
414n22 Zenith Optimedia, 297n4
About the Author
Vanita Kohli-Khandekar is a media specialist and writer. She has been tracking
the Indian media and entertainment business for over a decade. Currently she
is a columnist and writer for Business Standard and Mid-Day. Her earlier stints
include the ones at Businessworld and EY. A Cambridge University fellow
(2000), Vanita teaches at some of the top communication schools in India.

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Praise for earlier editions

‘This best-selling book presents a comprehensive analysis of the current state

‘This book presents a comprehensive history and up-to-date analysis of the

First published in 2003

Library of Congress Cataloging-in-Publication Data

ISBN: 978-81-321-1356-0 (PB)

—Vivek Mehra, Managing Director and CEO,

Get to know more about SAGE, be invited to SAGE events, get on

This book is also available as an e-book.

References and Select Bibliography 415

Table 2.3 The growth of Indian TV broadcasting—The

For most of us in the media and entertainment industry, we

But, what is consequential is that these changes also offer all of

report completely, for the sake of consistency, I have used those.

As usual, feel free to revert to me with feedback at vanitakoh-

My heartfelt thanks to the following people for sharing their time

A.K. Bhattacharya—Editor, Business Standard. Anish Dayal—

Vora—Creation Publicity • Kanchan Sinha—Amarchand Man-

• Sajith Pai—BCCL • Sumeet Chatterjee—RPG Group • Tariq

My special thanks to the following people for giving me the

A.K. Bhattacharya • Samit Sinha, Aveek Sarkar, Niranjan Ra-

Research assistant—Sinduja Rangarajan—has worked as a quali-

Regulation section updated by Abhinav Shrivastava, an asso-

A huge debt of gratitude to A.K. Bhattacharya, editor, Business

It is the hundredth year of Indian cinema.1 Private television

One, there will be more media and more mass media in

Two, the battle for scale and margins will continue.

Three, we will become a nation of local media ghettoes.2

There are other broad trends—digitisation, the spread of de-

More Media, More Mass Media and More Fun

from the sheer numbers that haven’t even been exposed to or

Even if you choose to ignore the US, since it is a more mature

The Battle for Scale

Little Islands of Media

Source: Hansa Research & IRS.

Source: Hansa Research and IRS.

Figure 0.1c Growth in Media

All India Reach (Urban + Rural) [million]

Source: Hansa Research and IRS.

Figure 0.1d Time Spent on Print Versus Reach

Source: Hansa Research and IRS.

Figure 0.1e Time Spent on TV Versus Reach

150 TV No of viewer (in millions) 20

Source: Hansa Research and IRS.

Table 0.1 The Indian Media and Entertainment Landscape

Media Reach Media Revenues (2012, ` billion)

Sources: FICCI-KPMG 2013, EY’s The Business of Experiences Report 2012,

Table 0.2 Advertising Spend on Media (` Mn)

Source: Lodestar Universal, FICCI-KPMG 2013 and author estimates.

Table 0.3 The Investment into the Media and Entertainment

Year PE Deals (` billion) M&A Deals (` billion)

Source: VCCedge, a data service from VCCircle.

Table 0.4 The Leading Media Groups in India

(Table 0.4 Contd.)

(Table 0.4 Contd.)

Sources: Annual reports, company websites and officials, Business Standard

Table 0.5 Indian Media and Entertainment—The Journey So Far

Media 2002 2012

(Table 0.5 Contd.)

(Table 0.5 Contd.)

Case Cross Media or Across Media—The Sad Story of

In 1998 the government granted industry status to the film

compulsions or fear. The industry’s need for growth, the au-

because policy could be changed to accommodate this class

Table 0.3 The Investment into the Media and Entertainment

Case Cross Media or Across Media—The Sad Story of